Commerce Ups Fertilizer Company's CVD Rate After Natural Gas Benchmark Adjustment
The Commerce Department on Aug. 4 switched from a "tier two" to a "tier three" benchmark in calculating the benefit received by countervailing duty respondent JSC Apatit for the provision of natural gas for less than adequate remuneration. Responding to the Court of International Trade's remand order in a case on the 2020-21 administrative review of the CVD order on phosphate fertilizer from Russia, Commerce adjusted Apatit's CVD rate from 28.50% to 49.64% (Archer Daniels Midland Co. v. United States, CIT # 23-00239).
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In remanding the review, the trade court sent back the benchmarks used for assessing the provision of phosphate rock mining rights and natural gas for LTAR programs (see 2505060055). For the phosphate rock mining rights program, the agency used a tier three benchmark, which Commerce calculated by comparing the actual per-unit cost buildup for Apatit's beneficiated phosphate rock with a world market price for comparable rock.
The agency said the production process for phosphate rock from sedimentary reserves differs from the process for rock from igneous reserves. CIT remanded this conclusion, finding that the agency wasn't supported in differentiating the data by whether it came from sedimentary or igneous reserves. Commerce set a benchmark "that reflected only a tiny percentage of global phosphate rock exports," since it only looked at sedimentary rock, the court said. CIT told Commerce to either present evidence showing the phosphate rock market is significantly driven by the distinction between sedimentary and igneous rock or reset the tier three benchmark.
On remand, Commerce stuck by its benchmark for phosphate rock mining rights, citing evidence of "differences between the costs to produce phosphate rock from sedimentary deposits versus igneous deposits" and explaining how "phosphate rock market prices are significantly driven by the distinction between sedimentary and igneous rock."
The agency said the record shows "evidence of significant differences between the two types of reserves for cost items such as capital costs, costs for developing reserves, and energy costs," however, Commerce said it wasn't able to quantify the effect of these differences. The evidence cited by the agency includes a report from a professor on phosphate mining licenses and a book from a separate professor on the "use of calcination in the beneficiation of sedimentary phosphate ore." Commerce said CIT didn't require the agency to quantify the differences between the two types of reserves on world market prices for phosphate rock.
The trade court also sent back the tier two benchmark for the provision of natural gas for LTAR program, which consisted of Kazakh export prices. CIT remanded the issue, since Gazprom, the Russian state-owned gas provider, only buys raw gas, which it then refines and exports back to Kazakhstan, while Apatit's gas purchases were of refined natural gas.
On remand, Commerce said the "raw natural gas exported by Kazakhstan is not comparable to the refined natural gas available in the Russian market that JSC Apatit purchased" from Gazprom. The agency said the record shows that the raw natural gas in the Kazakh export data isn't comparable to the "higher quality refined natural gas purchased by JSC Apatit, which goes through a costly stage of refinement to become a product for sale commercially."
The agency said the Kazakh data isn't an appropriate tier two benchmark, adding that there are no viable tier two benchmarks. Thus, the agency reverted to a tier three benchmark, opting for regional OECD natural gas prices from the International Energy Agency.