65 FR 30067, May 10, 2000 

                                A-570-840
                                ARP: 2/1/98-1/31/99
                                PUBLIC DOCUMENT
                                IA, DAS I, Office 1;GWC, ext. 2239


MEMORANDUM TO: Troy H. Cribb
               Acting Assistant Secretary
                 for Import Administration

FROM:          Richard W. Moreland
               Deputy Assistant Secretary
                 for Import Administration


SUBJECT:       Issues and Decision Memo for the Administrative
               Review of Manganese Metal from the People's
               Republic of China - February 1, 1998 through
               January 31, 1999; Final Results


SUMMARY


We have analyzed the briefs and rebuttals of interested parties in
the 1998-99 administrative review of the antidumping duty order
covering manganese metal from the People's Republic of China (PRC).
As a result of our analysis, we have made changes, including
corrections of certain inadvertent programming and clerical errors,
in margin calculations. We recommend that you approve the positions
we have developed in the Discussion of Issues section of this
memorandum. Below is a complete list of the issues in this
administrative review for which we received comments and rebuttals by
parties:

Comment 1: Application of China-wide Rate
Comment 2: Normal Value for SCL
Comment 3: Factual Information Regarding CMIECHN/CNIECHN
Comment 4: Ore Valuation
Comment 5: Electricity Valuation
Comment 6: Liquid Ammonia Valuation
Comment 7: Selenium Dioxide Valuation
Comment 8: Positive Mud Valuation
Comment 9: Factory Overhead, SG&A, and Profit Valuation
Comment 10: Excluding Labor from Factory Overhead and SG&A Ratios
Comment 11: Ocean Freight-Use of Reported Costs
Comment 12: Ocean Freight Valuation


BACKGROUND

On December 9, 1999, the Department of Commerce (Department) published
the preliminary results and partial rescission of the review of the
antidumping duty order on manganese metal from the PRC.(1) The period
of review (POR) is February 1, 1998 through January 31, 1999. We
invited
parties to comment on our preliminary results of review. At the
request
of certain interested parties, we held a public hearing on February 3,
2000.


DISCUSSION OF ISSUES

Comment 1: Application of China-wide Rate

In the Preliminary Results, 64 FR at 69002, the Department stated
its intention to instruct Customs to liquidate the entries of third-
country resellers Sumitomo Canada, Limited (SCL) and Shieldalloy
Metallurgical Corporation/London & Scandinavian Metallurgical Co.,
Limited (SCM/LSM)(2) "at the cash deposit rate in effect for their
supplier(s) at the time of entry."

Petitioners' Arguments:(3) The petitioner Kerr-McGee Chemical LLC
(KMC) argues that the Department should liquidate the entries of
third-country resellers at the China-wide dumping margin of 143.32
percent, rather than at the cash deposit rate of the PRC supplier.
According to KMC, liquidating at the China-wide rate would be in
accordance with the Department's notice of notice relating to
antidumping duties assessment.(4) KMC notes that in the Assessment
Notice, 63 FR at 55362, the Department indicated that, "if . . . the
Department determines in the administrative review that the producer
did not know that the merchandise it sold to the reseller was
destined for the United States, the reseller's merchandise will not
be liquidated at the assessment rate the Department determines for
the producer or automatically at the rate required as a deposit at
the time of entry." Rather, the Department continued, "entries of
merchandise from the reseller during the period of review will be
liquidated at the all-others rate if there was no company-specific
review of the reseller for that review period."(5) KMC argues that
because there was no company-specific review conducted for either SCL
or LSM, and because there is no record evidence that CMIECHN/CNIECHN,
the respondent and PRC supplier of these two resellers, knew that its
sales to these resellers were destined for the United States,
consistent with the Assessment Notice the "all-others" rate is the
appropriate liquidation rate for these resellers.

KMC provides the following two reasons why the Department should
rely upon the policies in the Assessment Notice notice regardless of
the fact that no final rulemaking notice has been published: First,
according to KMC, the policies in the Assessment Notice are in
accordance with 19 U.S.C § 1675(a)(2)(A) (1994). Second, KMC
continues, SCL and LSM had ample notice of the Department's intention
to assess the all-others rate in circumstances similar to these
because the Assessment Notice was published four months prior to the
period during which parties could request reviews; SCL and LSM,
therefore, should have requested a review of their sales.

SCL's Arguments: SCL counters by arguing that assessing duties on
SCL's entries at the cash deposit rate is correct because it is both
the Department's established practice(6) and "the law of this
proceeding, as established in the prior review."(7) Accordingly, the
Department should liquidate SCL's entries at the cash deposit rate.
SCL continues that there is no basis for assigning the PRC-wide rate
to SCL's entries because the rate was originally calculated in the
LTFV Investigation(8) based upon adverse "best information available"
(now referred to as "facts otherwise available") due to the
unresponsiveness of certain PRC manganese metal producers. SCL argues
that none of the statutory criteria under which the Department can
impose a facts available rate in this review(9) applies to SCL. SCL
has never failed to cooperate with the Department but, rather, has
acted to the best of its ability by providing complete questionnaire
and supplemental responses as well as case and rebuttal briefs.
Furthermore, according to SCL, a country-wide rate in a non-market
economy case is based on the presumption of government control of all
exporters of subject merchandise from that country absent an
affirmative demonstration by the exporter that it is not subject to
government control. As SCL is an exporter of subject merchandise from
a market economy country, it is clearly not subject to PRC government
control and, therefore, there is no reasonable basis for applying a
country-wide rate based on this presumption.

SCL maintains that, contrary to KMC's arguments, the Assessment
Notice does not constitute "ample notice" of the Department's
intention to assess the all-others or PRC-wide rate on SCL's entries,
for several reasons: First, the Assessment Notice does not even
address the peculiar problems involved in the assessment of
antidumping duties on exports by market economy resellers of subject
merchandise originally produced in NME countries. It likewise does
not discuss the difference between a country-wide rate and an all-
others rate, nor does it address the treatment of resellers, such as
SCL, who have cooperated with the Department's request for
information. Rather, the Assessment Notice focuses on the treatment
of resellers covered by an administrative review which have not
participated in the review and have not received a separate
assessment rate. Second, the Assessment Notice stated that any
proposals it contained would only become effective after the
publication of a "final notice on this issue." SCL notes that the
Department has never published this final notice. Moreover, the
Department's announced position on how it would deal with resellers
in this proceeding was again reiterated subsequent to the publishing
of the Assessment Notice.

The very first indication, SCL continues, that it had of the
Department's intended change in position was the preliminary results
of the second review, which was not published until after the close
of the anniversary month (and, therefore, the close of the period for
requesting a review) of the current administrative review. Therefore,
SCL was not even aware of a need to protect its rights by requesting
an administrative review to determine a company-specific margin until
after the time for requesting such a review had already expired.
Under such circumstances, procedural due process requires that SCL be
afforded an opportunity to secure a company-specific margin. To
support this argument, SCL cites to Transcom Inc. v. United
States,(10) where the Court of Appeals for the Federal Circuit stated
that:

What the statutory and regulatory notification provisions require is
that any reasonably informed party should be able to determine, from
the published notice of initiation read in light of announced
Commerce Department policy, whether particular entries in which it
has an interest may be affected by the administrative review.

Id., at 882-883

When SCL did become aware of the Department's proposed change in
methodology, SCL argues, it immediately entered its appearance in
this administrative review, and completed a questionnaire and
supplemental questionnaire. Accordingly, it believed that it had been
selected for individual examination as a voluntary respondent. Its
responses, SCL believes, meet all of the requirements of a voluntary
response under the Act and, therefore, if the Department chooses not
to liquidate SCL's entries at the cash deposit rate, it must
determine a company-specific dumping margin for SCL.

SMC/LSM's Arguments: SMC/LSM likewise argues that the Department's
announced intention to liquidate its entries at the cash deposit rate
collected at the time of entry is correct. SMC/LSM notes that the
period of time in which it could have requested a review of LSM's
sales during this review had already passed prior to the Department's
first announcement (in the preliminary results of the prior review)
of its previous intention to liquidate non-verified CMIECHN/CNIECHN
sales at the PRC-wide rate. This original intention, according to
SMC/LSM, represented an unexpected change in Department policy.
SMC/LSM argues that prior determinations, as well as earlier segments
of this proceeding, clearly establish that the Department's policy
has been that for non-PRC exporters of subject merchandise from the
PRC, the cash deposit rate will be the rate applicable to the PRC
supplier of that exporter. SMC/LSM continues by arguing that new
assessment practices discussed in the Assessment Notice should not be
applied in this instance because the Department has not published a
final notice on this issue.

SMC/LSM notes further that, though its sales were not reviewed, it
placed on the record, at the suggestion of the Department,(11)
information establishing that: (1) CMIECHN/CNIECHN directly supplied
the subject merchandise exported by LSM and imported by SMC during
the POR, and (2) CMIECHN/CNIECHN would have had no reason to have
known at the time of sale to LSM that this merchandise was ultimately
destined for the United States. SMC/LSM, therefore, concludes that
the correct liquidation rate for its entries is the cash deposit rate
under which they entered.

Department's Position: We disagree with KMC's argument that the
application of the assessment practices described in the Assessment
Notice would be appropriate in this case. The Assessment Notice
clearly states that the proposed clarification will apply "to all
entries for which the anniversary date for requesting an
administrative review is on or after the date of publication of a
final notice of this issue."(12) No final notice to this effect has
yet been published. Therefore, the Department's assessment practice
at the time of the entry of the merchandise in question is applicable.

The resellers' merchandise at issue entered the United States
between February 1, 1998 and January 31, 1999 (i.e., during the POR).
On March 13, 1998, the Department published the final (unamended)
results of the first administrative review, in which it stated, "for
non-PRC exporters of subject merchandise from the PRC, the cash
deposit rate will be the rate applicable to the PRC supplier of that
exporter."(13)

Accordingly, the resellers' merchandise was entered at the cash
deposit rate of their PRC supplier. In Mn Metal II, presented with a
similar fact pattern of entries by resellers, the Department stated
that it would "instruct Customs to liquidate all POR entries by bona
fide third-country resellers at rates equal to the cash deposit
required at the time of their entry."(14) Therefore, because the fact
pattern of bona fide third-country resellers in this review is
largely the same as in Mn Metal II, consistent with the Department's
current stated practice, for these final results we find that the
assessment methodology detailed in the Preliminary Results is
appropriate.


Comment 2: Normal Value for SCL

SCL's Arguments: SCL argues that if the Department does not adopt in
these final results its preliminary decision to liquidate SCL entries
at the cash deposit rate (see Comment 1 above), then the Department
must calculate a specific rate applicable to SCL. Moreover, SCL
contends, not only is it entitled to its own company-specific dumping
margin, but that margin must be calculated based on the normal value
information SCL provided in its questionnaire responses. According to
SCL, the statute provides that where subject merchandise is exported
to the United States from an intermediate country, the general rule
is that normal value shall be determined in the intermediate
country.(15) Since Canada is the intermediate country and SCL sold
identical merchandise in both Canada and the United States, normal
value should be determined based on SCL's Canadian sales.

SCL further argues that 19 U.S.C. § 1677b(c)(1), the statutory
provision for dealing with non-market economies (NMEs), indicates
that deriving normal value by valuing factors of production only
applies to subject merchandise that is "exported from a non-market
economy country." SCL's merchandise is exported from Canada to the
United States and, therefore, does not fall within the scope of this
provision. Accordingly, SCL asserts, the statute precludes using PRC
factors of production in establishing normal value for SCL exports
from Canada to the United States.

Petitioners' Arguments: KMC and Eramet counter that if the
Department were to calculate a company-specific dumping rate for SCL,
the Department must do so using a NME analysis. KMC argues that the
contention of SCL that the Department will as a general rule
determine normal value for the sales of resellers in the intermediate
country is incorrect. In particular, both petitioners note, the
statute states that normal value may be determined in the country of
origin if any of the four conditions listed in the statute are
present. According to both petitioners, in the case of SCL, many of
these conditions apply.

Moreover, KMC holds that, contrary to SCL's final argument, the
Department can establish normal value for third country resellers of
subject merchandise using a NME factors of production methodology,
citing the Notice of Final Determination of Sales at Less Than Fair
Value; Ferrovanadium and Nitrided Vanadium from the Russian
Federation, 60 FR 27957, 27958 (May 26, 1995), as an example.

Department's Position: This issue is moot because we have determined
that the appropriate liquidation rates for the third-country
resellers' entries are the cash deposit rates in effect at the time
of entry for their respective PRC suppliers. See Comment 1 above.


Comment 3: Factual Information Regarding CMIECHN/CNIECHN

Petitioners' Arguments: Eramet argues that information on the record
provided by its "PRC researcher" clearly establishes that the
respondent CMIECHN/CNIECHN had "contracted out" the No. 2 Factory of
XTMM, a PRC producer of subject merchandise exported by
CMIECHN/CNIECHN, during a period overlapping the POR. According to
Eramet, this information also indicates that this contract was
ultimately cancelled because CMIECHN/CNIECHN was exporting other
producers' manganese metal under XTMM's brand name. Eramet maintains
that this information from its PRC researcher directly refutes
statements and documents, provided at verification by XTMM and
CMIECHN/CNIECHN, indicating that this contract was canceled shortly
after it was signed and, therefore, never went into effect. According
to Eramet, other inconsistencies between XTMM and CMIECHN/CNIECHN
officials' statements, and the documents both companies provided at
verification further cast doubt on the veracity of the respondent's
representations.

Eramet urges the Department to find that CMIECHN/CNIECHN has
provided untruthful information to the Department regarding this
issue and, therefore, has failed to cooperate to the best of its
ability with the Department's request for information. Accordingly,
Eramet maintains, the Department should reject CMIECHN/CNIECHN's
questionnaire responses and verification documents and, instead,
apply adverse facts available in determining a dumping margin.

Respondent's Arguments: CMIECHN/CNIECHN counters by arguing that
Eramet's alleged inconsistencies are largely clarified and resolved
when all of the information in the verification reports is taken into
account. Moreover, according to the respondent, all of the
information, statements from high-level officials at XTMM and
CMIECHN/CNIECHN, and the verification documents together refute any
"false information" from the PRC researcher that an agreement between
XTMM and CMIECHN/CNIECHN had actually been implemented during the POR.

Department's Position: We disagree with the Eramet's contention that
the respondent has fundamentally misrepresented its relationship with
its manganese metal supplier. During verification of both
CMIECHN/CNIECHN and XTMM, we examined this relationship extensively
by reviewing documentation and by questioning officials at both
companies directly about the allegations Eramet has made.(16) The
general explanation--consistently presented by both CMIECHN/CNIECHN
and XTMM officials--for the documentation procured by Eramet's
researcher(17) is that both companies had initially intended to enter
into an agreement to jointly operate XTMM's No. 2 Factory and,
accordingly, had drafted the necessary operating plans, internal
documentation, and legal applications to that effect.(18) For various
reasons, however, the agreement was never implemented, as formalized
by a "cancellation notice" signed by both companies.(19) Given that
application to government authorities for approval of this joint
project had already been made, it then took both companies some
months to work through the legal implications of the agreement's
cancellation.(20)

With regard to the Eramet's allegation that CMIECHN/CNIECHN had
exported other producers' manganese metal under XTMM's brand name, we
note that the verification results do not support this conclusion. As
explained by XTMM officials, ". . . neither XTMM nor the factory
management is aware of any instances where CMIECHN/CNIECHN has sold
manganese metal produced by a different producer under XTMM's brand
name."(21) The same officials continued by noting that,

. . . it would be illegal, and very difficult, to misrepresent the
producer of the manganese metal because the merchandise is inspected
by an independent government inspection bureau that confirms the
producer of the merchandise.(22)

There is, moreover, some question as to the completeness and
accuracy of the information procured by Eramet's researcher. For
instance, it appears that many of the conversations between Eramet's
researcher and XTMM officials, on which much of Eramet's allegations
are based, were with officials that had little or no direct
involvement with the agreement or even with the No. 2 Factory.(23)
This is a particularly relevant fact given that XTMM is a large
manufacturer, with numerous employees producing a variety of
products.(24)

Furthermore, the researcher states the following:

He Dong Ping told me that during the contracting period between
{CMIECHN/CNIECHN} and XTMM regarding the No. 2 Branch factory, China
Metallurgical purchased electrolytic manganese of poor quality at
lower prices from other small manganese factories, mixed it with its
own manganese, and exported it under the brand name of XTMM.(25)

However, given that the record evidence of this and previous reviews
is clear that CMIECHN/CNIECHN is only a trading company and,
therefore, does not manufacture its own manganese metal, it is
unclear what the researcher's reference to "its own manganese" means.
Furthermore, at verification we questioned Mr. He Dong Ping, the
current senior director of XTMM's No. 2 Factory, about this statement
attributed to him.

We asked if he knew of any instances where CMIECHN/CNIECHN had sold
non-XTMM manganese metal under XTMM's brand name. We also asked
whether this issue has ever been discussed with CMIECHN/CNIECHN.

Mr. He responded (emphatically) that he is not aware of any
instances where this has occurred or even been alleged. He reiterated
that CMIECHN/CNIECHN has been an important customer with a good
reputation for a long time.(26)

For these reasons, we find that there is no credible or conclusive
evidence indicating that the respondent has provided untruthful
information, or that it has failed to cooperate to the best of its
ability with the Department's requests for information. The
statements of company officials at both CMIECHN/CNIECHN and XTMM were
reasonably consistent and supported by the documentation examined at
verification. In the course of the two verifications, we noted no
evidence that, during the POR, any CMIECHN/CNIECHN owner or employee
could or did exercise restraint or direction over XTMM-related
operations. Accordingly, the application of adverse facts available
is not appropriate.


Comment 4: Ore Valuation

Ore 1

In the Preliminary Results, we valued Ore 1 using a price quotation
for carbonate manganese ore from a Brazilian manganese ore mine.

Petitioners' Arguments: KMC argues that the Department should no
longer use the Brazilian quotation to value Ore 1. According to KMC,
the Ghanian quotation it submitted better represents Ore 1 for the
following reasons: (1) Ghana is more comparable in economic
development to the PRC than is Brazil;(27) (2) there is no evidence
to indicate that the Brazilian ore quotation is for commercial grade
ore; (3) the Brazilian quote is unreasonably low compared to the
world market price; (4) the Brazilian price represents one individual
transaction whereas the Ghanian price represents an average yearly
price (which is the Department's preference(28)); and (5) the Ghanian
quote offers greater detail on the chemical composition than the
Brazilian quote which allows for better assessment of its value.

KMC also claims that, in the preliminary results of this review, the
Department erroneously used the 1995-1996 freight rate to arrive at
the surrogate value for Ore 1. KMC argues that the Department should
have adjusted the rate to the POR.

Eramet adds that the Brazilian quote for Ore 1 is a non-published
quote from a producer that has ceased operations and was only selling
remaining stock. Therefore, Eramet requests that the Department not
rely on such information.

Respondent's Arguments: CMIECHN/CNIECHN argues that the Department
should continue to use the same surrogate information used in the
preliminary results. According to the respondent, the petitioners
have not provided any evidence supporting the allegation that the
Brazilian price quote is for off-specification ore. The respondent
contends that the petitioners' information regarding the Ghana quote
did not contain the proper chemical analysis and that such analysis
was submitted untimely. Finally, the respondent argues that the
Ghanaian information should not be used since the information was
submitted in confidence and, therefore, is not publicly available
information.

Department's Position: For the final results, we have continued to
use the Brazilian ore quotation. We disagree with the petitioners'
claim that the Ghanaian quotation is the best information to value
Ore 1. We address each of the petitioners' arguments below.

While the petitioners may be correct that Ghana is a country more
comparable in economic development with China than Brazil, we note
that this fact alone does not lead us to use Ghana as the surrogate
value country. Section 773(c)(4) of the Act requires us to examine,
in addition to economic development, whether the surrogate country is
a significant producer of merchandise comparable to the subject
merchandise. The petitioners point to language from Sebacic Acid,
which states that our preference is to use surrogate values from
countries at a similar level of development.(29) However, the
language from Sebacic Acid also says that we would use surrogate
values from countries not at a comparable level of development if we
cannot find these values in an economy that produces comparable
merchandise.

In the original investigation, we determined that comparable
merchandise includes only manganese metal and ferromanganese.(30) The
petitioners, however, have not provided any record evidence
indicating that Ghana is a significant producer of either manganese
metal or ferromanganese alloy.(31) We have determined from our
analysis that Ghana does not produce either product found to be
comparable merchandise, whereas Brazil does.(32) Therefore, we
continue to find, as we have done since the first administrative
review,(33) that Brazil is the most suitable country for valuing this
ore.

The petitioners argue that the Brazilian ore was not commercial
grade ore. However, to the contrary, we found in Mn Metal II that the
Brazilian quote was for commercial grade ore.(34) In that review, we
stated the following:

We agree with the respondents that the 1998 Brazilian ore price
quotation represents the best ore surrogate information available on
the record. To start, we note that the ore price quotation originated
with the Brazilian ore producer in question, whereas the seemingly
contrary information was provided by the petitioners' researcher. In
light of other information regarding this surrogate value, we cannot
conclude that commercial sales did not exist during the POR simply
because the petitioners' researcher could not obtain information on
commercial prices from the ore producer's management.

...Moreover, given that the specifications stated for the 1998 price
quotation were essentially the same as those for the 1993 price
quotation (which was, undisputably, for a commercial grade ore), it
would seem likely that the ore producer, a long-established seller of
ore on the world market, would clearly indicate in the 1998 quotation
that the ore grade on offer was not of commercial quality, if that
were the case. There is nothing in the 1998 price quote, however,
indicating that the merchandise on offer is not of normal commercial
grade. Also, contrary to the information provided by the petitioners'
researcher that "the remaining inventories of 1998 refers to the
cleaning of stocks, with very low quantity . . ." the quoted 1998
price is for a quantity of 35,000 to 44,000 metric tons, an amount
which would generally be considered commercial. Additionally, despite
the petitioners' general assertion to the contrary, there is no
evidence on the record to suggest that in 1998 the Brazilian mine
sold its ore at a discount merely because it was in the process of
closing down its mining operations.(35)

In light of the above, and since the same Brazilian quote used in
the previous reviews is on the record in this review, we continue to
find that the Brazilian quote was for commercial grade ore and was
for commercial amounts.

The petitioners argue that the Brazilian quote should not be used
because it is unreasonably low compared to the world market prices.
We note that the world market ore price represents "high grade"
ore.(36) The Chinese ore, however, is a medium grade ore. Our goal in
selecting a surrogate value is to find an Ore 1 source which is of a
comparable quality to that of the Chinese ore. Thus, we do not find
the argument that the Ghana price is closer to the world market price
than the Brazilian quote to be persuasive.

Regarding the petitioners' argument that the Brazilian quote
represents an individual price, while the Ghanian quote represents a
yearly average, we note that in Mn Metal I, we found it reasonable to
assume that the 1993 Brazilian quote represents a price which was in
effect at least over several months rather than a stand-alone spot
price.(37) In addition, while it is true that the 1998 Brazilian
quote on the record in this case states that this individual offer is
valid until June 9, 1998 (the date of the offer was June 1, 1999),
there is no evidence that the price would not remain constant on
quotes throughout the year; rather only that the overall offer was
valid for nine days.

The petitioners argue that the Ghanaian quotation includes a more
specific chemical analysis than the Brazilian quotation. We find that
while the Brazilian quotation does not account for 100 percent of the
ore's chemical content, the level of chemical analysis specificity
that is accounted for by this quote continues to be sufficient for
purposes of this case. We stated in the Mn Metal II that the "level
of specification and detail with regard to the ore's primary physical
and chemical properties are sufficient for determining the
quotation's suitability as a surrogate value."(38) The same Brazilian
quote used in Mn Metal II is on the record in this review, and
therefore, we continue to find the level of chemical analysis
sufficient for this review. Furthermore, we have found in previous
reviews that the manganese-to-iron ratio is an important factor in
the selection of Ore 1 values. When we compare the manganese-to-iron
ratios of the Brazilian and Ghanaian ore to the Chinese ore, we find
that the Brazilian ore is closer to the Chinese ore.

Moreover, our preference is to use publicly available information
(see e.g., Certain Helical Spring Lock Washers from the People's
Republic of China, 58 FR 48835 (September 20, 1993)). The information
relating to the Ghanaian quotation is completely bracketed unlike the
Brazilian quote which is public. In addition, we note that the
Brazilian quote is more contemporaneous with the POR than the
Ghanaian quote. Our preference is to use data that is contemporaneous
with the POR. See e.g., Sebacic Acid.

Finally, we agree with the petitioners that we did not adjust the
rail rate to the POR when we calculated the total rail cost. For the
final results, we have corrected this error by using the appropriate
inflation factor to adjust the rail rate to the POR.(39)

Ore 2

In the Preliminary Results, we valued Ore 2 using a 1998 price
quotation for manganese ore from an Indian company, Tata Iron and
Steel Co., Ltd. (Tata).

Petitioners' Argument: The petitioners argue that the Department
should value Ore 2 using a price quote it obtained from another
Indian company, Mysore Minerals Ltd. (Mysore) rather than rely on the
quote from Tata. The petitioners note that the manganese-to-iron
ratio for the Mysore ore is closer to the Chinese ore. The
petitioners also point out that they submitted a September 1999 price
quote from Tata that is different from the Tata quote used in the
preliminary results.

Respondent's Argument: The respondent argues that both the Mysore
and the September 1999 Tata quotes for Ore 2 fall outside of the POR
and should, therefore, be rejected. To support its argument, the
respondent cites Notice of Final Determination of Sales at Less than
Fair Value: Sebacic Acid from the People's Republic of China 59 FR
28055 (May 31.1994) where the Department stated its preference to
select surrogate information which is "representative of a range of
prices within the POI . . . , or most contemporaneous with the POI .
. . ." The respondent adds that if the Department uses the Mysore
quote it should deflate the quote to make it contemporaneous with the
POR.

Department's Position: We have determined that both the 1998 Tata
quote and the Mysore quote are valid quotes representing prices for
Ore 2 during the POR. As a result, we have averaged the two prices
for the final results. We do not agree with the petitioners' argument
that we should rely solely on the Mysore quote since the manganese-to-
iron ratio is closer to the respondent's ore. Regardless of whether
this is true, it is not clear that this ratio is a relevant factor in
selecting an Ore 2 surrogate. Furthermore, we have not used the 1999
Tata quote provided by the petitioners because the quote is
representative of prices that are outside the POR. Finally, we
disagree with the respondent's argument that, if we use the Mysore
quote, we should deflate the prices back to the POR. We note that the
Mysore quote states very clearly that the prices included in the
quote were valid during the POR.


Comment 5: Electricity Valuation

In the Preliminary Results, to value the PRC producers' electricity
input the Department used the average of electricity tariffs for
"large industries" across all Indian states as of March 1995, as
published in the Handbook of Statistics by the Conference of Indian
Industries (CII Handbook).(40) To derive a surrogate value that is
contemporaneous with the POR, consistent with our usual practice we
inflated this March 1995 figure by the Indian wholesale price index
(WPI), as published by the International Monetary Fund in the
International Financial Statistics.

Petitioners' Arguments: The petitioners argue that the continued use
of this significantly dated average electricity rate, inflated by
this general Indian WPI, is unreasonable in light of considerable
increases (exceeding those in the WPI) in Indian electricity prices
since 1995. The petitioners propose instead the use of the more
recent electricity rate data originally compiled by the Center for
Monitoring Indian Economy (CMIE) and published by the Indian Chamber
of Commerce in Calcutta. In light of the fact that even this more
recent CMIE data is prior to the POR, the petitioners further propose
that the CMIE data be inflated by an Indian electricity-specific
price index, as published by the Reserve Bank of India (RBI), to
derive a surrogate electricity value contemporaneous with the POR.

The petitioners acknowledge that, in Mn Metal II, the Department did
not use similar information from the CMIE in part due to "uncertainty
surrounding this data."(41) However, the petitioners contend,
information on the record of this review adequately demonstrates the
accuracy, objectivity and breadth of coverage of the CMIE data
required by the Department for surrogate value selection. In
particular, the petitioners note, the CMIE data are publicly
available, published data, and the CMIE has been relied upon by the
Department as an acceptable source of surrogate data in the past.
Moreover, the respondent has not submitted any evidence suggesting
that the CMIE data are inaccurate or unreliable, nor, the petitioners
contend, has the respondent submitted any equivalent or better data.
The petitioners, therefore, argue that there is no basis for the
Department to question the data, and that it is the Department's
practice to assume such data are accurate and reliable, absent record
information to the contrary.

In addition to the issue of accuracy, objectivity, and reliability,
the petitioners also argue that the CMIE data are more
contemporaneous and more specific than the data relied upon in the
Preliminary Results. First, the rates in the CMIE data are dated in
1996 and 1997, while the rates in the CII Handbook were effective in
1995. Second, the CII Handbook divides industrial users of
electricity into three broad groups ("small," "medium," and "large"),
whereas the CMIE data further divide industrial users into 11
subcategories based on monthly electricity consumption. Given that
the PRC producers' monthly electricity consumption can be derived
from information on the record, using the CMIE rates for the
appropriate sub-category would yield a more specific and accurate
electricity surrogate value.

Respondent's Arguments: CMIECHN/CNIECHN argues that the CMIE data
should not be used because they were not used in any other segment of
this proceeding and, therefore, their accuracy, objectivity and
breadth of coverage have not been confirmed. However, should the
Department decide to use the CMIE data, the respondent suggests that
the Department use the November 24, 1997, CMIE electricity rate only,
given that it is the most recent rate information available. It
further suggests that, because it appears that the price of Indian
electricity has declined since the release of the CMIE data, we
deflate the CMIE rates to account for the decline in the intervening
period.

Department's Position: For these final results, we have derived an
Indian electricity surrogate based on both the CMIE rates and the CII
Handbook rates.(42) These data represent the most recent data
available. Contrary to the respondent's arguments, the record data
indicate that there was generally a significant increase in Indian
electricity prices throughout the second half of the 1990s. Moreover,
we inflated the quoted rates in the source documentation to the POR
using the electricity sector-specific price index published by the
RBI. Because this index is narrower than the WPI, it is a more
accurate measure of the price adjustments experienced by Indian
producers using electricity. Also, we have not adopted the
respondent's proposed use of the November 24, 1997, rate quote
because it represents the rate of only one of the Indian states,
whereas it is the Department's preference to use an average rate that
reflects the value of the input throughout the surrogate country.(43)


Comment 6: Liquid Ammonia Valuation

In the Preliminary Results, we valued liquid ammonia using import
values from India's import statistics, as published by the government
of India.

Petitioners' Arguments: KMC argues that instead of the Indian import
values, we should value this factor using a price quote for ammonia
submitted by KMC and obtained from an Indian chemicals dealer. The
reported chemical concentration in the price quote, KMC contends,
closely matches the concentration levels reported for the
respondent's liquid ammonia.

Respondent's Arguments: CMIECHN/CNIECHN counters that, based on the
reported chemical concentration (in particular, the 0.2 percent water
content) of the petitioners' Indian price quote, it is clear that
this price quote is for a chemical substantially different from the
"liquid ammonia" used by the PRC producer. The Indian import values,
on the other hand, are for liquid ammonia and, consequently, should
be used to value this factor.

Department's Position: The respondent has reported that "liquid
ammonia" is used to produce manganese metal. The respondent reasons
that because the Indian chemical dealer's price quote represents a
product with a maximum 0.2 percent water content, the price quote
must be for "dry" ammonia. This reasoning is incorrect, however.
Based on a survey of various ammonia products offered by chemicals
dealers worldwide, we have confirmed that commercial-grade liquid
ammonia used in industrial applications and offered for sale on world
markets can and does contain only a maximum water content around 0.2
percent. However, the Indian dealer's price quote submitted by KMC
indicates that the quoted prices are for "ammonia gas," not liquid
ammonia. Therefore, in these final results, we have continued to use
the Indian import values for category 2814 "Ammonia Anhydrous or in
Aqueous Solution" to value liquid ammonia.


Comment 7: Selenium Dioxide Valuation

In the Preliminary Results, we valued selenium dioxide using a 1998
price quotation from an Indian selenium manufacturer.

Respondent's Arguments: The respondent argues that we should use the
Indian import statistics it submitted to value selenium dioxide
because the import statistics are publicly-available, published
information.

Petitioners' Arguments: KMC counters that under the statute the
Department is required to value factors of production on the basis of
the "best available information regarding the values of such factors
in a market economy country . . . .(44) Moreover, the Department's
established practice is to use surrogate values that correspond as
closely as possible to the input consumed by the NME producer. Eramet
adds that the respondent's arguments with regard to selenium are the
same as those already considered, and rejected, by the Department in
the preceding review. Therefore, because the respondent has not
advanced any new arguments or cited any new evidence warranting
reconsideration of this issue, and because the surrogate value used
in the preliminary results most accurately represents the value of
the respondent's selenium dioxide, both petitioners urge the
Department to continue to value selenium dioxide using the 1998 price
quotation from the Indian selenium manufacturer used in the
Preliminary Results.

Department's Position: We agree with the petitioners that the 1998
price quotation used in the Preliminary Results is the best available
surrogate value because it is for the actual chemical used by the
respondent. The value in the import statistics preferred by the
respondent is for selenium, not selenium dioxide--the factor reported
by the respondent.


Comment 8: Positive Mud Valuation

In the Preliminary Results, we valued "positive mud" (a by-product
in manganese metal manufacture) using the 82-84 percent manganese
dioxide ore price published in the Indian Minerals Yearbook (IMY).

Respondent's Arguments: The respondent argues that this IMY 82-84
percent ore is an incorrect surrogate value, for several reasons.
First, positive mud is not an ore, but a by-product resulting from
the electrolytic processing of MnO2 ore. Therefore, the respondent
reasons, a product resulting from the transformation of the ore
cannot be considered to be the ore itself. Rather, the resulting
product should command a higher price than the ore. However, the IMY
82-84 percent ore surrogate value the Department used for positive
mud was "at an almost 100 percent lower price" than the surrogate
value the Department used for the ore 2 input.

According to the respondent, the IMY 82-84 percent manganese dioxide
ore surrogate value is clearly aberrational and should disregarded.
This finding would be consistent with the Department's practice in
the LTFV Investigation where, according to the respondent, to value
this by-product the Department used manganese dioxide but not
manganese dioxide ore. Therefore, concludes the respondent, in these
final results the Department should use a value for electrolytic
manganese dioxide (EMD) to value positive mud.

Petitioners' Arguments: Both petitioners counter that the
respondent's arguments with regard to positive mud were made in the
preceding review, and were rejected by the Department. KMC further
argues that in light of the impurity levels inferred from the
respondent's reported chemical content for positive mud, positive mud
clearly cannot be equated to electrolytic manganese dioxide, which
has a very high (at least 92 percent) concentration of MnO2.
Moreover, KMC continues, the respondent reports that its positive mud
is sold to chemical companies who use it as an additive to paint,
whereas electrolytic manganese dioxide is used in dry-cell battery
production.

Finally, according to KMC, the respondent's argument that positive
mud surrogate value used in the preliminary results was "at an almost
100 percent lower price" is mistaken and is based on confusion in
understanding the reported metallurgical composition; the content of
the positive mud is stated as a percentage of manganese dioxide
whereas the content of the ore 2 surrogate is stated in terms of
manganese (only). Therefore, because the respondent has not advanced
any new arguments or cited any new evidence warranting
reconsideration of this issue, both petitioners urge the Department
to continue to value positive mud using the same surrogate as in the
preliminary results.

Department's Position: We have considered this issue in prior
segments of this proceeding. As in the first and second
administrative reviews, we disagree with the respondent's contention
that the IMY 82-84 percent manganese dioxide ore is an inappropriate
surrogate for valuing positive mud. In Mn Metal I, we stated,

The Department disagrees with the respondents' argument for the use
of EMD as a surrogate value. First, the respondents are incorrect in
stating that the Department used for a by-product surrogate in the
LTFV Investigation an Indian import value for manganese dioxide
excluding ores. In the LTFV Final Determination, the Department used
an 82-84 percent MnO2 peroxide ore, as listed in the 1993 Indian
Minerals Yearbook, to value the respondents' by-product credit. EMD
is a very high-valued product used mainly in the production of dry-
cell batteries . . . The respondents have not sufficiently
demonstrated that the PRC by-product is of the same rigorous
specifications as EMD.

The respondents have demonstrated, however, that their by-product
does have some resale value. In lieu of any information on the Indian
value of the actual by-product in question, the Department is
maintaining the methodology used in the LTFV Final Determination of
using for a surrogate the price of high-valued Indian manganese
dioxide ore.(45)

Moreover, as stated in Mn Metal II, 64 FR at 49459, we find the
respondent's comparison of the surrogate value for positive mud with
the surrogate value for ore 2 to be misplaced. The respondent reasons
that the value of a by-product must be greater than the value of an
input from which the by-product was generated. However, a by-product
(as distinct from a co-product) is something that is generated
incidentally in the course of manufacturing some primary finished
good, in this case manganese metal. The fact that the respondent's by-
product happens to have some residual value does not require that
value to be greater than the value of the ore used in the
manufacturing process.

The respondent implies that our choice of a lower-valued by-product
surrogate suggests value destruction, which occurs when the value of
the inputs is greater than the value of the final product. This is
not the case. The value created in this manufacturing process is
captured in the price of the primary product-manganese metal-and is
fully recoverable, under normal market conditions, in the sale of
that product. Any value recovered from the sale of the by-product
merely serves to offset the production costs incurred in the
production of the primary product. We, therefore, have not changed
our choice of the positive mud surrogate value for these final
results.


Comment 9: Factory Overhead, SG&A, and Profit Valuation

To value the PRC producers' factory overhead, SG&A and profit in the
Preliminary Results, we calculated surrogate ratios based on
financial data reported in the RBI Bulletin.

Petitioners' Arguments: The petitioners argue that we should use
data from the CMIE to value the PRC producers' factory overhead, SG&A
and profit because the Department's established practice is to base
surrogates upon the industry experience closest to the producer under
investigation.(46) The petitioners suggest that the CMIE data, which
is specific to Indian nonferrous metals producers, is more
representative of manganese metal manufacture than the RBI data,
which more broadly encompasses the "processing and manufacture" of
"metals, chemicals and products thereof."

Moreover, the petitioners continue, the RBI Bulletin data pertain to
the period 1992-93, whereas the CMIE data reports financial
information for 1996-97 and are, therefore, more contemporaneous with
the POR. It is particularly important that the Department use a more
contemporaneous surrogate source than the dated RBI Bulletin for
these expense ratios given the significant increases in Indian
electricity costs, as noted in Comment 5 above.

The petitioners recognize that the Department chose not to use
similar CMIE data to value these expenses in Mn Metal II, where it
stated,

Given that the Department has not examined this information in prior
proceedings, and given that the publisher of this data appears to be
a private research organization rather than a government agency, we
attempted to analyze the methodology used to collect, synthesize and
report this data. . . .{We find} that there is insufficient
information on the record to confirm the accuracy, objectivity, and
breadth of coverage (i.e., the extent to which the data reflects the
financial experience of companies across all of India) of the data
presented.(47)

In response to the Department's previous reservations regarding this
surrogate value, the petitioners make the following points: First,
the CMIE data are publicly available published information, which is
the Department's preferred surrogate source. The petitioners cite
Tapered Roller Bearings, where the Department stated that "{a}bsent
information on the record which leads the Department to question the
accuracy and appropriateness of such data, the Department normally
accepts publicly available published information as reliable."(48)
CMIECHN/CNIECHN has provided no evidence, according to the
petitioners, that the CMIE data for the nonferrous metals sector are
inaccurate or unreliable, and the record contains no such evidence.
The petitioners, therefore, maintain that there is no basis in the
record or the Department's practice for questioning the objectivity
or reliability of the CMIE data.
Second, the petitioners continue, the fact that the Department has
not previously used CMIE data to value these expenses is not a valid
reason to not use the CMIE data in this review; the Department is
required by the statute to use more specific surrogate data, when
available, to calculate a more accurate dumping margin. The
petitioners cite to Bulk Aspirin as an example where to value factory
overhead, SG&A and profit the Department relied on a surrogate source
not previously used.(49)

Third, the petitioners note that the Department has routinely used
private rather than governmental sources of surrogate data in non-
market economy cases, such as to value certain process chemicals in
this proceeding. Moreover, the petitioners contend, government data
are not necessarily more accurate.

Fourth, continue the petitioners, there is no basis for questioning
the breadth of coverage of the CMIE data. According to information on
the record, the CMIE data for the nonferrous metals sector are drawn
from CMIE's database on the Indian corporate sector, which includes
financial information for over 10,000 companies representing over 70
percent of India's gross domestic product. The petitioners reason
that this aggregate CMIE data for the nonferrous metals sector is
clearly more comprehensive than the financial statements of one or a
few Indian companies, on which the Department has relied in other
proceedings where more specific data to value these expenses was
necessary.

Respondent's Arguments: The respondent disagrees that the CMIE data
is the most appropriate surrogate source for these expenses, for
several reasons. First, the respondent contends, the CMIE data does
not accurately reflect the factory overhead, SG&A and profit of
manufacturing companies. This is because over one-third of the
companies included in the CMIE aggregate corporate financial database
are non-manufacturing companies. According to the respondent, the
makeup of factory overhead, SG&A and profit of non-manufacturing
companies, such as service providers, is different from that of
manufacturing companies.

Second, the respondent continues, contrary to the claims of the
petitioners the CMIE data is not specific to nonferrous metals
producers; rather, according to the notes accompanying the data, the
data includes information for a wide variety of non-metals related
industries (e.g., food products, fertilizers, chemicals). Use of this
data, the respondent maintains, would be inconsistent with the
Department's "coumarin methodology," where the Department has used
"the data {from the RBI Bulletin} for the industrial sector which
most closely resembles the coumarin industry, 'Processing and
Manufacture-Metals, Chemicals and products thereof'."

Department's Position: Based on our review of the source data
presented and of the petitioners' proposed calculation of surrogate
ratios for factory overhead, SG&A and profit, for the final results,
we have adopted a similar calculation based on CMIE's reported
aggregate financial data. We find that in the information and
reasoning they present, the petitioners have addressed sufficiently
the concerns raised by the Department in Mn Metal II about using this
data source. Most notably, the petitioners have shown that the CMIE
is a reasonably accurate and reliable source of surrogate data. The
petitioners have also provided considerable evidence demonstrating
that the CMIE is a widely known, credible and relied-upon research
organization, whose data is utilized by other organizations such as
the Indian Chamber of Commerce.

Furthermore, Eramet has shown that the CMIE data is more specific to
and, therefore, more reflective of manganese metal production than
the RBI Bulletin data. For example, contrary to the respondent's
contentions the 1996/97 CMIE figures used to derive the surrogate
ratios appear to represent the aggregate data of 71 Indian nonferrous
metals producers. Eramet has further demonstrated why it is
reasonable to conclude that the data in the two CMIE publications are
derived from the same database of corporate financial information
and, therefore, that relationships between the expenses in one
publication can be used to make reasonable inferences about the data
in the other.

Finally, because the CMIE data are derived from the 1996/97
financial results, they are more contemporaneous with the POR than
the data in the RBI Bulletin. Thus, we have used the CMIE data to
derive surrogate factory overhead, SG&A and profit ratios for these
final results. As discussed above, we have made certain adjustments
to the petitioners' proposed ratios.(50)


Comment 10: Excluding Labor from Factory Overhead and SG&A Ratios

Respondent's Arguments: The respondent argues that the Department
should include the labor and labor benefit items, such as the
"Provident Fund" and "Employees Welfare Expense," in the cost of
manufacture before the calculation of the factory overhead, SG&A and
profit ratios. The respondent cites an accounting textbook that
states that ". . . a labor-intensive firm-a firm whose operations are
performed manually and only incidentally by machines-should use a
labor-oriented base . . ." in making labor-exclusive overhead
allocations." Citing several past cases, the respondent claims
further that the standard Department practice is to include such
expenses in the cost of manufacture (COM) for determining the factory
overhead, SG&A and profit ratios.

Petitioners' Arguments: Eramet counters that CMIECHN/CNIECHN's
arguments against excluding labor from the SG&A expense ratio are
ones that it made in the preceding review, and are ones which the
Department has already rejected. Therefore, because the respondent
has not advanced any new arguments or cited any new evidence
warranting reconsideration of this issue, Eramet urges the Department
to continue to reject the respondent's arguments in this regard.

Department's Position: We believe that the calculation of labor-
exclusive surrogate overhead and SG&A percentages is appropriate and
reasonable. Eramet is correct in stating that we have addressed these
specific arguments before. In Mn Metal II, we explained our reasons
for rejecting identical (verbatim) arguments from the respondent:

To start, we note that our calculation of the profit surrogate ratio
fully includes all labor costs in the numerator and denominator. We
have excluded all labor costs from our calculation of overhead and
SG&A ratios, however, to increase the accuracy and specificity of our
valuation of the respondents' costs of production. In particular, we
have the somewhat unusual benefit in this case of having reported
total unit labor inputs (broken down into direct, factory overhead
and SG&A labor categories). We therefore have valued the total unit
labor costs of the PRC producers by multiplying the total unit labor
inputs by the surrogate wage rate. In many past cases, only direct
labor was reported and, therefore, overhead and SG&A labor was
subsumed within the general surrogate percentages for the overhead
and SG&A cost categories.

Given that we are valuing overhead and SG&A labor directly based on
the respondents' reported factors, we have excluded all labor (from
both the numerator and denominator) in calculating surrogate ratios
for the remaining overhead and SG&A costs. Likewise, we have excluded
all labor components from the respondents' direct inputs cost base to
which we apply these labor-exclusive surrogate overhead and SG&A
ratios. As the petitioners point out, failure to do so would in this
case overstate the respondents' total labor costs.

Turning to the respondents' other points, the passage in the
accounting text cited by the respondents does not necessarily pertain
to the facts of this case. First, it does not appear that the
respondents' producer is a labor-intensive firm, "whose operations
are performed manually and only incidentally by machines." To the
contrary, based on reported and verified information, the manufacture
of manganese metal is technologically sophisticated, involving
advanced equipment and machinery to support complex chemical and
electrolytic processes. Labor, therefore, would not appear to be the
central input driving the overhead and SG&A cost structure of the
producer.

Moreover, we agree with the petitioners' argument that the cited
passage is referring to the allocation of factory overhead costs
among multiple products. The issue at hand, however, is the
appropriate means of estimating the costs of certain producers (the
PRC manganese metal manufacturers) based on the relative size of
certain costs to the total cost structure of other producers (Indian
chemicals and metals manufacturers).

Furthermore, it is true that the overhead and SG&A ratios in TRBs-10
were based on the reported costs of particular Indian TRBs producers
whereas the overhead and SG&A surrogates in this review are based on
the aggregated data of Indian chemicals and metals producers
generally as published by the Reserve Bank of India. It is important
to note, first, that these two sources are not that dissimilar given
that the aggregate data presumably incorporates the experiences of
individual producers. Any differences between the surrogates,
however, are beside the point. Whether or not to exclude labor in
deriving overhead and SG&A ratios is a methodological issue specific
to each case which depends on whether and to what extent the
Department must adjust and manipulate the surrogate data to derive
cost estimates that best reflect the production costs in the
respondents' country.(51)

For the same reasons, we have continued to derive labor-exclusive
overhead and SG&A surrogate ratios for these final results.


Comment 11: Ocean Freight-Use of Reported Costs

In the Preliminary Results, the Department used surrogates rather
than reported costs to value ocean freight which, the respondent
claims, was provided by a market-economy shipper.

Respondent's Arguments: The respondent argues that the surrogate
value the Department used to value ocean freight in the Preliminary
Results was unreasonable and that, instead, the Department should use
CMIECHN/CNIECHN's reported information to value ocean freight in
these final results. The respondent states that the information the
Department verified on CMIECHN/CNIECHN's bills of lading, including
the shippers' names and addresses, was accurate and complete, and can
be tied to CMIECHN/CNIECHN's expense ledgers and audited financial
statements which show the applicable freight charges. Additionally,
the respondent contends that it is not reasonable to disregard
CMIECHN/CNIECHN's reported international freight information on the
basis that the payments for this service were made through a local
PRC agent. The respondent states that foreign freight forwarders in
the PRC must hire local agents to handle billing if forwarder is not
locally registered. However, if the Department determines that it
should continue to value CMIECHN/CNIECHN's ocean freight costs using
surrogate rates, the respondent argues that it should calculate a
more reasonable surrogate value based on price quotations from a
sample of international forwarding companies.

Petitioners' Arguments: Eramet contends that, as in the preceding
review, the Department should reject the respondent's argument
because there was no evidence that CMIECHN/CNIECHN purchased ocean
freight directly from the market-economy carrier. In fact, Eramet
continues, the respondent even concedes in its case brief that it
purchased ocean freight from PRC companies.

Eramet further argues, citing to 19 U.S.C. §1673b(c), that the
Department cannot use the ocean freight information provided by the
respondent because transactions between NME entities are presumed to
be distorted and unuseable for purposes of calculating a dumping
margin. Eramet contends that although the Department may value ocean
freight using the actual amounts paid by NME entities to market-
economy shippers, in situations where the NME exporter purchased the
ocean freight services from an NME entity, the Department must use a
surrogate value. In Saccharin,(52) Eramet notes, the Department
rejected the use of an actual freight cost because those costs were
purchased from a domestic supplier in the NME.

Department's Position: We agree with Eramet that CMIECHN/CNIECHN was
unable to support its claim that it purchased ocean freight services
from market-economy carriers. Furthermore, the respondent has not
supplied evidence that the PRC agents from which CMIECHN/CNIECHN
allegedly purchased ocean freight acted as agents for the market-
economy carriers, rather than as PRC resellers of ocean freight
services. At verification, the Department examined ocean freight
documentation for several of CMIECHN/CNIECHN's sales.(53) Ultimately
the verification team could not determine that the ocean freight
CMIECHN/CNIECHN reported as supplied by a market-economy carrier was,
in fact, supplied by (or the corresponding expenses paid to) a market-
economy carrier. Furthermore, the freight cost incurred in shipping
at least one sale, as recorded in the respondent's accounting
records, was considerably different from the freight expense the
respondent reported for that sale in its questionnaire responses.
Therefore, in these final results the Department has continued to
value CMIECHN/CNIECHN's ocean freight costs using a surrogate freight
rate. With regard to the respondent's arguments regarding which
surrogate value we should use for ocean freight, see the following
comment.


Comment 12: Ocean Freight Valuation

To value ocean freight in the Preliminary Results, we used a July
1996 price quotation for international shipping to the U.S. east and
west Coasts from Maersk Inc., as taken from the record of TRBs IX.(54)

Petitioners' Arguments: Eramet argues that for the final results we
should use the more recent Maersk ocean freight rate quotations that
it has placed on the record. Eramet states that its updated
quotations are more specific to manganese metal and more specific to
the actual routes and ports, as reported by the respondent, through
which the subject merchandise was shipped.

Eramet acknowledges that the Department chose not to use the same
freight quotation in Mn Metal II,(55) but believes that this decision
was based on "an apparent misunderstanding" that the data were
submitted as proprietary data under the Department's administrative
protective order (APO) regulations. Eramet contends, however, that
its updated Maersk quotations could not have been submitted as
business proprietary information for the following reasons: First, in
submitting the quotations, Eramet did not follow the specific steps
required under the Department's APO regulations when requesting
proprietary treatment for information. Second, Eramet could not have
requested proprietary treatment even if it had wanted to given that
the Maersk quotations are public information, not the business
information of Eramet, and their release would not cause any harm to
Eramet's competitive position.

Rather, Eramet continues, it bracketed the updated Maersk quotations
in order not to disclose the identity of the original and arrival
ports, for which the respondent had requested proprietary treatment.
Eramet maintains that under the statute and the decisions of
reviewing courts, the Department cannot use less specific and,
consequently, less accurate ocean freight data merely because the
respondent claimed proprietary treatment for the identity of the
ports. Doing so, Eramet contends, would allow the respondent to
control what surrogate value data are used by selectively claiming
proprietary treatment for information regarding specific inputs.

Moreover, Eramet disputes the Department's proprietary treatment of
the identity of the respondent's ports in the first place. According
to the Department's regulations,(56) Eramet states, the Department
normally treats the destination of sales as proprietary only if the
destination would reveal the name of particular customers. Eramet
notes that for the respondent's information at issue, the U.S. ports
are not even the final destination but only an intermediate point in
the shipment of the subject merchandise. Moreover, there is no reason
to believe that particular customers could be inferred from the
respondent's reported U.S. ports. In fact, Eramet notes, the U.S.
ports of arrival for manganese metal are available from public
sources. Likewise, Eramet argues, given that the respondent's PRC
supplier of manganese metal is public, the disclosure of the PRC port
of origin (which, presumably, is a reasonable distance from the
factory) for these shipments should not cause substantial competitive
harm to the respondent.

Thus, Eramet concludes, the Department should either require the
respondent to resubmit its data without the identity of its ports of
origin or arrival bracketed, or require the respondent to provide a
detailed explanation why this information should be accorded
proprietary treatment.

Respondent's Arguments: The respondent counters that if the
Department uses a surrogate to value ocean freight in these final
results, it should not use the ocean freight rate surrogate provided
by Eramet. First, the respondent argues, Eramet's rate quotations
were in effect only after the POR. Moreover, the respondents note
that the petitioners' quotations are not publicly-available published
information.

Department's Position: For the final results, we derived surrogate
ocean freight rates for the U.S. east and west coasts, separately,
based on actual freight rate data for manganese ore and electrolytic
manganese metal obtained from the Federal Maritime Commission
(FMC).(57) The FMC data are contemporaneous with the POR, are
specific to manganese metal and similar merchandise, and are public
data. By contrast, Eramet's proposed freight surrogates have been
bracketed in their entirety, are not for manganese metal or even a
remotely similar product, and may not be contemporaneous with the POR.


RECOMMENDATION

Based on our analysis of the comments received, we recommend
adopting all of the above positions and adjusting all related margin
calculations accordingly. If these recommendations are accepted, we
will publish the final results of review and the final weighted-
average dumping margins for all reviewed firms in the Federal
Register.



AGREE ____________

DISAGREE _________



Troy H. Cribb
Acting Assistant Secretary
  for Import Administration


Date: May 3, 2000

___________________________________________________________________
footnotes:


1. Manganese Metal from the People's Republic of China; Preliminary
Results and Partial Rescission of Antidumping Administrative Review,
64 FR 68999 (December 9, 1999) (Preliminary Results).

2. LSM was a third-country exporter of subject merchandise during
the POR. SCM was the affiliated U.S. importer of record of LSM's U.S.
sales.

3. There are two petitioners: Kerr-McGee Chemical LLC, and Eramet
Marietta Inc.

4. See Antidumping and Countervailing Duty Proceedings: Assessment
of Antidumping Duties, 63 FR 55361 (October 16, 1998) (Assessment
Notice).

5. In its rebuttal, KMC cited additional related excerpts from the
Assessment Notice.

6. As an example of the Department's established practice, SCL cites
to Manganese Metal from the People's Republic of China; Amended Final
Results of the Antidumping Duty Review, 64 FR 7624, 9626 (February
16, 1999) (Mn Metal I; Amended Final).

7. Manganese Metal from the People's Republic of China; Final
Results of Second Antidumping Administrative Review, 64 FR 49447,
49460 (September 13, 1999) (Mn Metal II).

8. Notice of Amended Final Determination and Antidumping Duty Order;
Manganese Metal from the People's Republic of China, 61 FR 4415
(February 6, 1996) (LTFV Investigation).

9. See 19 U.S.C. 1677e. Under the statute, the Department may use
facts available if the necessary information is not available on the
record, or if the interested party (A) withholds information that the
Department has requested, (B) fails to provide such information in
the form or manner requested, (C) significantly impedes the
proceeding, or (D) provides information which cannot be verified. The
Department may use an inference that is adverse to the interests of
the party in selecting from among facts available if that party has
failed to cooperate by not acting to the best of its ability to
comply with the Department's request for information.

10. 182 F.3d 876 (Fed. Cir. 1999)

11. Letter from Susan Kuhbach, Senior Director, AD/CVD Office 1, to
Harris, Ellsworth & Levin (June 29, 1999).

12. Assessment Notice, 63 FR at 55361.

13. Manganese Metal from the People's Republic of China; Final
Results and Partial Rescission of Antidumping Duty Administrative
Review, 63 FR 12440, 12449 (March 13, 1998) (Mn Metal I).

14. Mn Metal II, 64 FR at 49460.

15. 19 U.S.C. § 1677b(a)(3).

16. The results of these verifications are detailed in the following
memoranda: Memorandum to the Case File from Greg Campbell and Paul
Stolz; Results of Sales Verification of CMIECHN/CNIECHN (November 22,
1999) (CMIECHN/CNIECHN Verification Report), and Memorandum to the
Case File from Greg Campbell and Paul Stolz; Results of Verification
of XTMM (November 22, 1999) (XTMM Verification Report).

17. See, e.g., Eramet's August 2, September 13 and December 2, 1999
submissions.

18. CMIECHN/CNIECHN Verification Report at 4, and XTMM Verification
Report at 2.

19. CMIECHN/CNIECHN Verification Report at 5, and XTMM Verification
Report at 2.

20. CMIECHN/CNIECHN Verification Report at 5, and XTMM Verification
Report at 3.

21. XTMM Verification Report at 6. This is also consistent with
CMIECHN/CNIECHN officials' statements in the CMIECHN/CNIECHN
Verification Report at 13.

22. Id.

23. XTMM Verification Report at 5.

24. XTMM Verification Report at 2.

25. Eramet's December 2 submission, at exhibit 2.

26. XTMM Verification Report at 6.

27. To support its proposition, KMC points to World Bank data
regarding classification of economies. See, KMC Brief dated January
10, 2000 at Exhibit 2.

28. KMC cites to Sebacic Acid From the People's Republic of China;
Final Results of Antidumping Duty Administrative Review, 62 FR 10530,
10533 (March 7, 1997) (Sebacic Acid).

29. Id.

30. See, Notice of Final Determination of Sales at Less Than Fair
Value: Manganese Metal From the People's Republic of China, 60 FR
56054, 56049 (November 6, 1995).

31. The petitioners themselves point to the surrogate country memo
to argue that the Department can go outside of the stated list if
none of the countries listed are a significant producer of comparable
merchandise. See, Memorandum from Jeff May to Susan Kuhbach dated
July 13, 1999. However, even if we do go off the list, the
requirement that the chosen country still be a significant producer
of comparable merchandise remains. The petitioners, while noting this
requirement in their briefs, did not take the opportunity to place
any information on the record regarding Ghana's production of
comparable merchandise.

32. See, Memorandum to Case File: Factors of Production Valuation
For the Final Result dated May 3, 2000 (FOP Memo) at Exhibit B
(Ferromanganese and Silicomanganese: World Production, by Country)

33. Mn Metal I, 63 FR at 12444.

34. Mn Metal II, 64 FR at 49454.

35. Id.

36. See, FOP Memo at Exhibit B (Memorandum to File regarding
discussion with Thomas Jones, dated October 14, 1997).

37. Mn Metal I, 63 FR at 12445.

38. Mn Metal II, 64 FR at 49454.

39. See FOP Memo at Exhibit C.

40. This same March 1995 average electricity rate has been used to
value electricity in previous segments of this proceeding, as well as
in several other PRC cases.

41. Mn Metal II, 64 FR at 49455.

42. A more detailed analysis of the electricity data available on
the record, as well as of the petitioners' proposed alternative
surrogate calculation, is included in the Memorandum to Susan Kuhbach
from Gregory Campbell; Analysis of Electricity Surrogate options for
Final Results (May 3, 2000).

43. Mn Metal I, 63 FR at 12446.

44. 19 U.S.C §1677b(c)(1)

45. Mn Metal I, 63 FR at 12448.

46. A more detailed analysis of the factory overhead, SG&A and
profit surrogates available on the record, including the petitioners'
proposed alternative surrogate calculations, is contained in the
Memorandum to Susan Kuhbach from Gregory Campbell; Analysis of
Overhead, SG&A and Profit Surrogate Ratio Options for Final Results
(May 3, 2000) (Factory Overhead, SG&A and Profit Memo).

47. 64 FR at 49457.

48. Tapered Roller bearings and Parts Thereof, Finished and
Unfinished, from the People's Republic of China; Final Results of
Antidumping Administrative Review, 61 FR 61276 (November 17, 1997).

49. Notice of Preliminary Determination of Sales at Less Than Fair
Value; Bulk Aspirin from the People's Republic of China, 65 FR 116119
(January 3, 2000).

50. For further information regarding these adjustments, see Factory
Overhead, SG&A and Profit Memo.

51. Mn Metal II, 64 FR at 49456.

52. Final Determination of Sales at Less Than Fair Value; Saccharin
from the People's Republic of China, 59 FR 58818, 58825 (November 15,
1994) (Saccharin).

53. CMIECHN/CNIECHN Verification Report at 15.

54. Tapered Roller Bearings and Parts Thereof, Finished and
Unfinished, From the People's Republic of China; Preliminary Results
of Antidumping Duty Administrative Review and Partial Termination of
Administrative Review, 62 FR 36764 (July 9, 1997) (TRBs IX).

55. See 64 FR at 49458.

56. 19 C.F.R § 351.105.

57. A more detailed analysis of the FMC freight rate data is
included in the Memorandum to Susan Kuhbach from Gregory Campbell;
Ocean Freight Rates from the Federal Maritime Commission (May 3,
2000).