CONTRACT FOR SALE & PURCHASE OF IRON ORE FINES

This contract is made by and between the buyer and seller whereby the Buyer agrees to buy and the Seller agrees to sell the under mentioned goods for export, on the terms and conditions stated below:-

A. "Ore" means Iron Ore Fines produced from mines in India

B. "INR or Rs. " means the lawful currency of India

C. "Wet basis" means Ore in its natural wet state.

D. "Dry basis" means Ore dried at 105 degrees centigrade.

E. "WMT" or "Wet metric ton" means a metric ton of Ore on Wet Basis.

F. "DMT" or "Dry metric ton" means a metric ton of Ore on Dry Basis.

G. "Trim" means seaworthy trim.

H. "Delivery quantity" means the final dry weight

I.   "Loading Port" means any safe port of India

CLAUSE 2    DELIVERY PERIOD AND QUANTITY

CLAUSE 3    SPECIFICATIONS

CLAUSE 4      PRICE

Rs                   Per Dry Metric Ton (DMT) Free on Board (F.O.B) stowed and seaworthy trimmed from any Indian Port, based on 63.50% Fe, fraction prorata.

CLAUSE 5      PRICE ADJUSTMENT

A)         For Fe Content

In respect of each shipment of iron ore which does not meet the Fe specifications set forth in clause 3 the base price referred to in clause 4 shall be adjusted in accordance with the Fe content as determined pursuant to the provisions of clause 9 as follows:-

The base price shall be increased by single prorata of the price as per clause 4 for each 1% Fe above 63.50% Fe fraction prorata.

The base price shall be decreased by double prorata of the price as per clause 4 for each 1% Fe below 63.50% Fe fraction prorata.

B)        For other elements

If the shipment does not meet any of the chemical specifications other than Fe provide in clause 3 as finally determined in accordance with the provisions of the clause 9, the base price shall be decreased in equivalent Indian Rupees as follows fraction prorata.

            i)          For excess Phosphorus

At the rate of 5(five) US Cents i.e. per dry metric tonne for each 0.01% in excess of 0.07%.

ii)         For excess Sulphur

At the rate of 5(five) US Cents per dry metric tonne for each 0.01% in excess of 0.02%.

iii)         For excess Silica

At the rate of 5(five) US Cents per dry metric tonne for each 1.00% in excess of  3%.

iv)        For excess Alumina 

At the rate of 5(five) US Cents per dry metric tonne for each 1.00% in excess of  3%.

C)                SIZE PENALTY

Oversize :US$ 0.50 PER MT equivalent in Indian Rupees on natural basis fraction prorata shall be applied to the quantities of  fines above  10mm in excess of  5%.

Undersize :US$ 0.50 PER MT equivalent in Indian Rupees on natural basis fraction prorata shall be applied to the quantities of  fines below 150 micron in excess of 30%.

D)                MOISTURE

If free moisture loss at 105 degrees centigrade as finally determined pursuant to the provisions of clause 9 exceed the guaranteed maximum referred to in clause 3, seller shall pay buyer the actual full freight attributable to moisture content over 8%. Moisture penalty to be adjusted in the final invoice of the Seller.

CLAUSE 6      PAYMENT

Buyer shall advance Rs.500 Lacs to the seller against seller's bank guarantee in favour of the buyer. Further on 95% value of supply worth Rs.475.00  Lakhs, the buyer will replenish by giving further advance Rs.475.00 Lakhs against the existing bank guarantee & this process shall carry on till the Bank Guarantee is valid & the contract is in force.     

A)         ADVANCE PAYMENT          

The buyer will give advance to the seller Rs.250000 Lacs by way Demand Draft  where it will operate/retire the said Inland Letter of Credit, as per the agreement format provided by the buyer.

B)        PROVISIONAL  PAYMENT

The first provisional payment shall be against the supporting documents as per Clause 7 A, B, C & D for the amount of 75% (Seventy Five percent) of the value of the supply of each respective shipment accompanied.

C)        FINAL  PAYMENT

The final payment  shall be payable either by at par cheque or demand draft within 7 banking days against seller's supporting documents as per Clause 7 E, F, G, H, I, J & K for the amount of 25 % (Twenty Five percent) of the value of each respective shipment accompanied by the documents . Surveyor for survey of vessel draft together with the certificate of analysis of Iron Ore Fines and of the percentage of the free moisture loss at 105°c issued by qualified surveyor shall be basis for seller's final invoice. 

CLAUSE 7      DOCUMENTS

For 75% Provisional Payment - Seller shall provide documents in the buyer name or in its associate name i.e                      ., as per the written instruction that will be given by the buyer to the seller to provide the following documents on the basis of which negotiations of the L/C will take place:-

A)                 Certificate of Quality and Certificate of Quantity of contracted goods in five copies each issued by SGS India Private Limited. Certificate of quality to show actual result of the test of chemical composition and all other tests called for in this contract.

B)                 Certificates from Port Authority & from Stevedoring agent of the seller confirming the Quantity received on daily basis (Port Weighment Certificate).

C)                Certificate from our authorized representative of the buyer at the Port i.e. quantity.

D)                Beneficiary's Commercial Invoice for the provisional payment  

For 25% Final Payment - Seller shall provide documents in the buyer name or in its associate name i.e.       ., as per the written instruction that will be given by the buyer to the seller to provide the following documents on the basis of which negotiations of the L/C will take place:-

E)                 Complete set of "Clean on Board" shipped Bill of Lading made out to order, blank endorsed marked "freight payable as per charter party" notifying at the port of destination.

F)                 Provisional invoice in 5 (five) copies indicating the contract number, L/C number, name of carrying vessel.

G)                Copy of Fax or telex advising shipment according to clause 12 of this contract.

H)                 Certificate of Quality and Certificate of Weight of contracted goods in five copies each issued by SGS India Private Limited. Certificate of quality to show actual result of the test of chemical composition and all other tests called for in this contract.

I)                    Certificate of Origin (One Original and three copies) to be endorsed or issued by Chamber of Commerce and detailing loaded quantity, commodity, carrying vessel and suppliers name and address.

J)                  Both the Draft survey reports i.e. empty as well as loaded to be issued by the nominated inspection agency as per the L/C.

K)                 Certificate from the Master of vessel towards demurrages or dispatch, if any. 

CLAUSE 8      WEIGHING

At the loading port seller at seller's expenses shall determine the weight of shipment of ore by two number draft surveys. One draft survey will be of empty vessel & other draft survey will be of loaded. The weight of ore as ascertained and certified together with qualified surveyor's analysis certificate shall be basis of seller's invoice. The weight of each shipment at the discharge port is to be ascertained by draft survey. The dry quantity shall be determined by deducting the free moisture referred to in clause 9 for such wet quantity. 

CLAUSE 9      SAMPLING AND ANALYSIS

At the loading port seller shall at seller's expense to appoint qualified surveyor to determine the specification of ore content in each shipment, and shall provide a certificate showing details of the determination and also the percentage of free moisture loss at 105°C. The seller in order to maintain consistency in the quality of the iron ore fines, shall carry out sampling, testing & analysis at the plot of discharge on daily basis so that monitoring of the quality is maintained through out the delivery of the consignment to the interest of all parties concern.

CLAUSE 10    NOTIFICATION OF ARRIVAL

Buyer shall advise seller 5 (five) days in advance of the estimated date of arrival of the vessel at any South Indian port specifying the type of vessel and hatch division.

The buyer shall arrange for the master of the vessel to notify seller three notices of the ETA of the vessel at the loading ports.  The first of such notice will be given 3(three) days prior to the ETA of the vessel, the second to be given 48(Forty Eight) hours prior to the ETA and the third to be given 24(Twenty Four) hours prior to the ETA.

CLAUSE 11    LOADING TERMS

A)                 Seller shall deliver to buyer in bulk, seaworthy trimmed, alongside Seller's wharf vessel being always afloat to a maximum permissible draft, when fully loaded at the place of loading.

B)                 Seller shall load ore aboard the vessel at the following rates per weather working day of twenty four (24) consecutive hours Saturdays, Sundays and Holidays included, but statutory holidays excepted.

For  South Indian Ports

C)                Notice of readiness to load shall be tendered within office hours (9AM - 6PM) with clean holds hatch open and ready in all respect to load at any time after vessel has arrived at loading port whether in berth or not.  If the vessel is not in free pratique on arrival at the berth due to causes attributable to the vessel, then a new notice of readiness shall be tendered.

Lay time for loading shall commence 12 running hours after tendering of notice of readiness unless used, in which case, actual time used to count. In case loading has to be interrupted due to reasons of responsibility of the vessel, such time lost shall not count as lay time. Stoppage of loading due to break down of the ore loading plant shall be counted as lay time. Lay time shall cease to count on completion of loading.

D)                DEMURRAGE/DESPATCH

Demurrage/despatch at the loading port shall be calculated in accordance with following schedule in equivalent Indian Rupees:-

Despatch will be half of the demurrage rate. Anytime necessarily required by a vessel with draft, when fully loaded upto permissible draft, at the place of loading, at the port of Karwar, after completion of loading. Demurrage/despatch settlement will be made prior to final payment to the Seller.

CLAUSE 12    ADVISE OF SHIPMENT

Seller shall, upon completion of loading, advise Buyer within three working days by cable/telex/fax of the contract number, name of vessel, name of commodity, gross weight and loading date.

CLAUSE 13    INSURANCE

To be covered by the ultimate buyer from the time ore is loaded on board the vessel.  For this purpose seller shall advise buyer by cable/telex/fax before the loading of the vessel starts and immediately after completion of the loading of the particulars as called for in Clause 12 of this contract.

CLAUSE 14    PENALTY FOR NON-PERFORMANCE

The Seller agrees to compensate the Buyer a 2.00% performance bond (P/B) which calculated based on the total value of the contract, in the event of Seller's failure to perform this contract.

CLAUSE 14    FORCE MAJEURE

If at any time during the existence of this contract either party is unable to perform whole or in part any obligation under this contract, because of war, hostility, military operation of any character, civil commotion's, sabotage, quarantine restriction, acts of Government, fire, floods, explosions, epidemics, strikes or other labour trouble, embargoes, then the date of fulfillment of any obligation shall be postponed during the time when such circumstances are operative.

Any waiver/extension of time in respect of the delivery of any installment or part of the goods shall not be deemed to be waiver/extension of time in respect of the remaining deliveries.  If operation of such circumstances exceeds three months, either party will have the right to refuse further performance of the contract in which case neither party shall have the right to claim eventual damages.  The party which is unable to fulfill its obligations under the present contract must be within 15 days of occurrence of any of the causes mentioned in this clause shall inform the other party of the existence of the circumstances preventing the performance of the contract.  Certificate issued by a Chamber of Commerce or any other competent authority connected with the cause in the country of the Seller or the buyer shall be sufficient proof of the existence of the above circumstances and their duration.  Non-availability of material will not be an excuse to the Sellers for not performing their obligations under this contract.

CLAUSE 15    ARBITRATION

All disputes or differences whatsoever arising between the parties out of or relating to the construction, meaning and operation or effect of this contract or the breach thereof may be settled by Arbitration in accordance with the Rules of Arbitration of the Indian Council of Arbitration and the award made in pursuance thereof shall be binding on the parties. The venue of arbitration proceedings will be at Kolkata, West Bengal.  The contract shall be governed and construed by Laws of India.

CLAUSE 16    TITLE AND RISK

The Title with respect to each shipment shall pass from Seller to the Buyers when Seller receives reimbursement of the proceeds from the opening bank through the negotiating bank against the relative shipping documents as set forth in Clause 7 after completion of loading on board the vessel at loading port, with effect retrospective to the time of delivery of ore. 

All Risk of loss, damage or destruction respecting the ore delivered shall pass to Buyer's at the time of discharge of the Ore from the loading devices into the vessel.

CLAUSE 17    LOSS OF CARGO

In the event of partial loss of cargo, the Bill of Lading weight and the analysis carried out by Buyer on the cargo discharged shall be treated as final and shall form the basis of final invoicing and payment.  In the event of total loss of cargo, the analysis and the weight as determined at the Loading port shall be treated as final and shall be used for final invoicing and payment.          

CLAUSE 18    AMENDMENT OF THE CONTRACT

Any amendment or modification to this contract shall be made in writing and subject to confirmation by the contracting parties.

CLAUSE 19    TAXES, DUTY & TDS

Taxes, Duties & TDS if any, payable or applicable, shall be to the account of the respective parties as per Indian Income Tax Act, Sales Tax Act and Excise Act ctc. Relevant Forms & Declarations shall be provided by the buyer to the seller on the completion of each shipment.  

CLAUSE 20    LIGALIZATION OF PLOT & IRON ORE FINES STOCK

Iron ore fines that will be delivered & dumped at the nominated plot of the supplier, shall be legalized in favour of the buyer by the seller & Iron ore fines that will dumped on this plot also to be legalized of the buyer so that the stock can be fully hypothecated to buyer's bank/s or its nominated agencies. The seller shall allow free egress and aggress to the authorized representative/s of the buyer and also the authorized representative/s of the bank/s designated by the buyer. The Seller shall not have any lien or charge on this iron ore fine stock that belongs to the buyer. The Seller shall carry out the required documentations in favour the buyer prior to the commencement of iron ore supply at the nominated plot located in the port  of the seller which will be the integral part of the documentations prior to accepting of Letter of Credit from the buyer against their BG.

CLAUSE 21    NOTICE

All communications referred to in this contract shall be in writing and will be sent by registered airmail and/or by E-Mail, cable, fax, on the address as follows:-

IN witness whereof this contract is made in triplicate on this 24^th day of May, 2005.