A Typical Long-Term Sale Contract with Japan (SAMPLE)

Transcription

1 A Typical Long-Term Sale Contract with Japan (SAMPLE) Contract No This Contract is made and entered into on this day of by and between the Minerals & Metals Trading Corporation of India Ltd., having its registered Head Office in New Delhi (hereinafter called Seller ) and the following steel mills of Japan (hereinafter called Buyers ). Name Registered Office WITNESSETH A) Whereas the Memoranda and the respective addendum thereto had been signed by and between representatives of Indian Iron Ore Negotiating Committee and Japan Steel Mills under the respective dates of and, hereinafter collectively called Basic Agreement calling for a total supply of tons of Kiriburu and Bailadila Iron Ore from India to Japan. B) Whereas, out of the said tons, tons would have been supplied up to the end of and a further tons have been contracted for comprising tons of Kiriburu Iron Ore for delivery upt o and tons of Bailadila Iron Ore for delivery up to leaving a balance of tons. Now, therefore, the parties hereto do hereby agree to conclude Contract for Sale and Purchase of Lumpy Hematite Iron Ore of Bailadila, India Origin on the following terms and conditions for the said tons to complete Basic Agreement. ARTICLE (1): DEFINITION In this contract the following terms shall, unless otherwise defined, have the following meanings: (1) Ore means the lumpy hematite iron ore produced from Bailadila Mines, Bastar District, Madhya Pradesh, India. (2) U.S. Currency means the currency of the United States of America freely transferable from and payable to an external account. (3) Long Ton means two thousand two hundred and forty (2,240) pounds avoirdupois. (4) Trimming means spout trimming. 1

2 (5) Delivery quantity means the final dry weight as set forth in Article (14) WEIGHING and Article (19) LOSS OF CARGO, of this Contract. (6) VIH means the existing Visakhapatnam Inner Harbour. (7) VOH means Visakhapatnam Outer Harbour. (8) LWL means Low Water Level ARTICLE (2): COMMODITY Lumpy hematite iron ore produced from Bailadila Mines, Bastar District, Madhya Pradesh, India. ARTICLE (3): DELIVERY QUANTITIES AND DELIVERY PERIOD The delivery period and the aggregate total of the respective quantity to be contracted for separately between Seller and each of Buyer shall be as follows: Contract Year 1 st year 2 nd Year 3 rd Year 4 th Year 5 th Year 6 th Year 7 th Year 8 th Year 9 th Year 10 th Year Total Delivery Quantities (Dry Long Tons) Subject to a tolerance of ten (10) percent more or less at Buyer s option. Similarly, Seller also shall reserve the right to decrease the stipulated quantity up to ten (10) percent. If the Buyer exercises the option to increase and seller exercises the option to decrease the quantity within the extent of ten (10) percent, then the delivery quantity shall be subject to the mutual negotiation. In case of special circumstances, where it is deemed necessary, however, and increase or decrease over ten (10) percent of the stipulated quantity may be allowed when both Seller and Buyer mutually agree to it. The quantities to be delivered to each Buyer in each year shall be notified to Seller by Buyer three months before the commencement of that year. 2

3 ARTICLE (4): GUARANTEED SPECIFICATIONS (1) Chemical Composition: (On the dry basis) Chemicals Iron (Fe) Silica Plus Alumina (SiO 2 + Al 2 O 3 ) Sulphur (S) Phosphorous (P) Copper (Cu) Lead (Pb) Zinc (Zn) Total of other metails (except Mn, Mg, Ca) Percentage 65% basis, 63% minimum 10% maximum 0.05% maximum 0.10% maximum 0.05% maximum 0.01% maximum 0.01% maximum 0.15% maximum (2) Free Moisture Loss at 105 o Centigrade: Seven (7) percent maximum in each shipment; annual average for shipments for each year under this Contract not to exceed (5) percent. (3) Physical Composition (on the wet basis) A minimum of eighty (80) percent of the ore shall be retained on 3/8 inch standard square screen and the maximum size shall be 6 inches with a tolerance of two decimal five (2.5) percent over 6 inches. The specifications guaranteed as above in respect of chemical and physical compositions shall apply to each shipment of the ore. ARTICLE (5): PRICE The prices shall be as below per dry long ton, FOB, loaded and trimmed, port of Visakhapatnam, India on the basis of sixty-five (65.00) percent of iron ore (Fe) content on the dry basis; (1) For shipments through VIH from to. (2) For shipments through VOH from to. ARTICLE (6): BONUS AND PENALTY (1) Iron (Fe): (2) Moisture: (3) Physical Composition: (4) Impurities: a. Phosphorus: b. Sulphur: c. Copper: d. Silica plus Alumina: e. Other Metals: 3

4 (5) Contamination and Stickiness: a. Foreign material in the ore delivered b. Substantially sticker Ore than is usually delivered by Seller. Contamination of foreign material shall be dealt with in accordance with the Agreement regarding admixture of foreign materials signed between the representatives of Seller and Buyer on. An independent licensed inspector shall determine the condition of the Ore in regard to stickiness. Seller shall have the right to be represented at this inspection through its representative at its own cost. (6) Non-conformance to Specifications: If in the shipment of the Ore under this contract, there are substantial discrepancies in final results from the guaranteed specifications in respect of Fe or other chemical compositions as set forth in Article (4) hereinabove, or in case that shipments not conforming to the guaranteed specifications are effected continuously, Buyer, while accepting such shipments subject to such additional penalties as may be mutually agreed upon, may request Seller to improve the quality of the Ore in future shipments. Seller, if so requested, shall promptly carry out a more intensive quality control program to ensure conformity to the guaranteed specifications in future shipments, failing which Buyer shall have the right to suspend further shipments till Seller guarantees improvements of the quality of the effect that further shipments shall fully confirm to guaranteed specifications and Buyer approves such improvements. ARTICLE (7): DELIVERY Delivery shall be deemed completed as and when the Ore has been loaded on board the vessel and trimmed. ARTICLE (8): PORTS AND FACILITIES (1) VIH The quantity to be delivered from the to shall be loaded at VIH. Seller shall accommodate vessels upto meters (640) in L.C.A. and upto 9.76 meters (32 feet) at all times at berth and meters (33 feet) in sailing draft at high tide. (2) VOH (A) A new loading port (VOH) shall be constructed and completed sufficiently to permit the loading of vessels by the end of and maintained, with the facilities and dimensions described in the Annexure, which shall form an integral part of this contract, to permit shipping smoothly the quantity stipulated in Article (3). (B) Size of Vessels: The minimum size of the vessels to be allocated by Buyer shall be 25,000 DWT for the first two years after completion of VOH as defined in Annexure hereto and 30,000 DWT thereafter. Under unavoidable circumstances, smaller vessels may be allocated on mutual agreement. 4

5 ARTICLE (9): PORT STOCKPILE (1) VIH Seller shall keep in ready stock at the Ore yard in the port area sufficient quantity of the Ore well conforming to the guaranteed specifications, to meet the shipping commitments. (2) VOH Seller shall keep in ready stock at the Ore yard in the port area quantity of the Ore as stipulated in II)-11 of the Annexure. ARTICLE (10): SHIPPING PROGRAM (1) Seller shall furnish Buyer for approval thereof with a provisional monthly shipping program for each year not later than three (3) months before the commencement of the shipments of the Ore for that year. (2) Seller shall notify Buyer of a definite shippable tonnage for each month not later than sixty (60) days prior to the commencement of shipment scheduled for the month. Such definite shippable tonnage, however, shall not deviate much from the provisional monthly shipping program indicated in accordance with Paragraph (1) hereinabove. ARTICLE (11): CHARTERING AND ALLOCATION OF VESSELS (1) All vessels to carry the Ore under this Contract shall be chartered and allocated by Buyer. (2) The vessel holds shall be clean and free of foreign materials which might result in admixture and/or contamination of the Ore. (3) Buyer shall in principal advise Seller of the vessels allocation program for the month based on the definite monthly shippable tonnage notified by Seller in accordance with Paragraph (2) of Article (10) not later than thirty (30) days prior to the commencement of shipments for the month. Such allocation program shall include the name of vessel, the quantity to be loaded (10% more or less at ship s option) and Expected Time of Arrival of each vessel at the loading port and estimated loading draft. The above allocation program shall be subject to Seller s conformation to be given promptly. (4) Lay Days: Buyer shall declare to Seller lay-days of fifteen (15) days spread for each vessel not later than twenty (20) days prior to the Expected Time of Arrival of each vessel at the loading port. (5) Buyer shall arrange that the vessel s crew open and close such hatches and remove and replace such beams as necessary for Ore in connection with loading and mechanical loader at vessel s risk and expense. (6) In the event of any change being made in the vessel s allocation program, Buyer shall advise Seller for their confirmation each time such change takes place at least fifteen (15) days prior to the arrival of the vessel. 5

6 (7) In the event of any vessel being chartered and allocated within twenty (20) days prior to the time of shipment, Buyer shall require Seller s confirmation. (8) In the event that Seller having once accepted the vessel fails to make shipment, Seller shall in accordance with the stipulation of Article (12) SHIPPING TERMS of this contract, indemnify Buyer for any loss incurred by Buyer as a result thereof. (9) Buyer shall arrange for the Master to give the Regional Office, the Minerals & Metals Trading Corporation of India Ltd., Visakhapatnam, three notices of the Expected Time of Arrival of the vessel at the loading port; its first notice to be given five days prior to the Expected Time of Arrival of the vessel along with the stowage plan, the second to be given 48 hours prior to the Expected Time of Arrival and the third to be given 24 hours prior to the Expected Time of Arrival. In the last notice the Master shall advice the approximate quantity of cargo required to be loaded within the tolerance agreed for the vessel. (10) Seller shall telegraph to Buyer its shipping advice in respect of each shipment forthwith after the sailing of the vessel from the loading port. Such shipping advice shall include, viz., a. Name of the vessel. b. Quantity shipped as set forth in Paragraph (1) of Article (14) (on the wet basis) c. Date of sailing ARTICLE (12): SHIPPING TERMS The loading shall be done by Seller at its risk and expense. The loading terms and conditions for vessels chartered and allocated in accordance with Articles (10) and (11) hereinabove shall in all respects be governed strictly by the provisions of this article. (1) Loading Rate (A) For shipments through VIH For vessels upto 18,000 deadweight tons Seller shall guarantee the loading rates as below per weather working day of 24 consecutive hours, Sundays and holidays included, but such Sundays and holidays to count as half a day whether actually worked or not, statutory holidays always excepted: For vessels of Liberty Size and upto 13,500 DWT For vessels of above 13,500 DWT and upto 18,000 DWT For vessels of above 18,000 DWT, Seller shall guarantee the loading rate as below per weather working day of 24 consecutive hours, Sundays and holidays included, statutory holidays always excepted. For vessels of above 18,000 DWT and upto 25,000 DWT For vessels of above 25,000 DWT and upto 30,000 DWT 6

7 (B) For shipments through VOH: Seller shall guarantee the loading rate as below per weather day of 24 consecutive hours, Sundays and holidays included, but statutory holidays except unless used and if used, the time actually used to count. (a) For the period of the first twelve (12) months after first shipment: a. For vessels of above 25,000 DWT and upto 30,000 DWT b. For vessels of above 30,000 DWT and upto 35,000 DWT c. For vessels of above 35,000 DWT and upto 40,000 DWT d. For vessels of above 40,000 DWT and upto 50,000 DWT e. For vessels of above 50,000 DWT and upto 60,000 DWT f. For vessels of above 60,000 DWT and upto 70,000 DWT g. For vessels of above 70,000 DWT and upto 80,000 DWT h. For vessels of above 80,000 DWT and upto 90,000 DWT i. For vessels of above 90,000 DWT and upto 1,10,000 DWT (b) For subsequent period beyond (a) above a. For vessels of above 25,000 DWT and upto 30,000 DWT b. For vessels of above 30,000 DWT and upto 35,000 DWT c. For vessels of above 40,000 DWT and upto 50,000 DWT d. For vessels of above 50,000 DWT and upto 60,000 DWT e. For vessels of above 60,000 DWT and upto 70,000 DWT f. For vessels of above 70,000 DWT and upto 80,000 DWT g. For vessels of above 80,000 DWT and upto 90,000 DWT h. For vessels of above 90,000 DWT and upto 1,10,000 DWT (2) Lay time: (A) For Shipments through VIH (a) Tender of Notice of Readiness Notice of Readiness to load shall be tendered on any days except statutory holidays, at any time in or out of office hours and even before commencement of lay days when the vessel is in free pratique with clean holds, and is ready in every respect to load, whether in berth or not. (b) Commencement of Lay time: (i) Lay time for loading shall commence 12 running hours after tender of Notice of Readiness unless loading is sooner commenced, in which case, half the time actually used before commencement of lay time to count. (ii) In case Notice of Readiness is tendered and loading commence before commencement of lay days, the computation of time-shoot will be done on the following basis. 7

8 (ii-1) If turn time of 12 hours expires prior to the first day of the stipulated lay days, then lay time will begin to count from hours of the first day of the lay days and the time actually used till then will be counted as half. (ii-2) If turn time of 12 hours expires soon after hours of the first day of the stipulated lay days, then the lay time will begin to count from such time that the turn time expires and the time actually used till then will be counted as half. (iii) In case where Notice of Readiness is tendered before commencement of lay days and vessel is not worked, the lay time shall count only after expiry of 12 hours turn time from hours of the first day of the stipulated lay days. (iv) In the event that the loading of vessel nominated by Buyer under this Contract or Kiriburu Iron Ore Contract is in progress and other vessel(s) are obliged to wait for commencement of loading, the commencement of lay time for such waiting vessels whether for Kiriburu or Bailadila Iron Ore shall be as follows; (iv-1) Lay time for the first waiting vessel shall commence 24 running hours after tender of Notice of Readiness (iv-2) Lay time for the second waiting vessel shall commence 36 running hours after tender of Notice of Readiness (iv-3) Lay time for the third and subsequent waiting vessels shall commence 36 running hours after tender of Notice of Readiness or 4 running hours after Notice, whichever is earlier. (v) In case the vessel is found not ready to load in all respects for any of the reasons stipulated in Paragraph (2) (A) (a) of this Article, only actual time lost in fulfilling the required conditions of readiness to load shall not count as lay time. (vi) If the hatches are not opened and hatch beams not removed on berthing, the time lost in opening of the hatches and removal of hatch means shall not be counted as lay time. (c) Counting of lay time Time taken in waiting for tide by a vessel with sailing draft of 9.14 meters (30 feet) or less shall count as lay time. Shifting time and expense for shifting of vessel from waiting berth to loading berth shall be to the account of the vessel. Time lost in waiting for berth to count as lay time unless otherwise stipulated in this Contract. In any case running of lay time shall not be interrupted for any vessels on demurrage unless loading is actually hindered due to the fault of such vessels. (d) Holidays Holidays at loading port shall be only those days declared as Charter Party holidays by competent authorities. Statutory holidays for each fiscal year shall be informed by Seller to Buyer according to the declaration of competent authorities before the commencement of that year. 8

9 (e) Completion of lay time Lay time shall cease to count immediately on completion of loading and trimming. (f) The vessel shall vacate loading berth as soon as loading is completed weather and time permitting. (B) For Shipments through VOH (a) Tender of Notice of Readiness Notice of Readiness to load shall be tendered on any days, at any time in or out of office hours and even before commencement of lay days when the vessel is in free pratique with clean holds, and is ready in every respect to load, whether in berth or not. (b) Commencement of lay time (i) Lay time for loading shall commence 12 running hours after tender of Notice of Readiness unless loading is sooner commenced, in which case, the time actually used before commencement of lay time, to count. (ii) In case Notice of Readiness is tendered and loading commences before commencement of lay days, the computation of time sheet will be done on the following basis. (ii-1) If turn time of 12 hours expires prior to the first day of the stipulated lay days, then lay time will begin to count from hours of the first day of the lay days and the time actually used till then will be counted. (ii- 2) If turn time of 12 hours expires after hours of the first day of the stipulated lay days, then the lay time will begin to count from such time that the turn time expires and the time actually used till then will be counted. (ii- 3) In case the turn time of 12 hours expires on the statutory holidays, then lay time will begin to count from hours of the next day unless sooner worked, in which case the time actually used till then will be counted. (iii) The cases where Notice of Readiness is tendered before commencement of lay days and vessel is not worked, the lay time shall count only after expiry of 12 hours turn time from hours of the first day of the stipulated lay days. (iv) In the event that loading of vessel is nominated by Buyer under this contract is in progress and other vessel(s) are obliged to wait for commencement of loading, the commencement of lay time for such waiting vessels shall be as follows: (iv 1) Lay time for the first waiting vessel shall commence 12 running hours after tender of Notice of Readiness. 9

10 (iv 2) Lay time for the second waiting vessel shall commence 18 running hours after tender of Notice of Readiness. (iv 3) Lay time for the third and subsequent waiting vessels shall commence 24 running hours after tender of Notice of Readiness or from the time of berthing, whichever is earlier. (v) In case the vessel is found not ready to load in all respects for any of the reasons stipulated in Paragraph (2) (B) (a) of this Article hereinabove, only actual time lost in fulfilling the required conditions of readiness to load shall not count as lay time. (vi) If the hatches are not opened and hatch beams not removed on berthing, the time lost in opening of the hatches and removal of hatch beams shall not be counted as lay time. (c) Counting of lay time Time taken in waiting for tide by a vessel with sailing draft of meters or less shall count as lay time except in the case of abnormally low tide and/or in the case of abnormal sea and weather conditions. Shifting time and expense for shifting or vessel from waiting berth to loading berth shall be to the account of the vessel. Time lost in waiting for berth to count as lay time unless otherwise stipulated in this contract. In any case running of lay time shall not be interrupted for any vessel on demurrage unless loading is actually hindered due to the fault of such vessel. (d) Statutory Holidays Statutory holidays for each fiscal year shall be informed by Seller to Buyer according to the declaration of competent authorities before the commencement of that year. (e) Completion of lay time Lay time shall cease to count immediately on completion of loading and trimming. (f) The vessel shall vacate loading berth as soon as loading is completed, weather and tides permitting. (3) Demurrage and Despatch Money (A) For shipment through VIH Rates of demmurage and dispatch money at port of loading shall be as follows: _ Despatch Money For vessels of above 13,500 DWT and upto 18,000 DWT _ Despatch Money 10

11 For vessels of above 18,000 DWT and upto 25,000 DWT Despatch Money For vessels of above 25,000 DWT and upto 30,000 DWT Despatch Money For vessels of above 30,000 DWT Despatch Money (B) For Shipments through VOH Rates of demurrage and dispatch money at the port of loading shall be as follows For vessels of above 30,000 DWT and upto 35,000 DWT Despatch Money For vessels of above 35,000 DWT and upto 40,000 DWT Despatch Money For vessels of above 40,000 DWT and upto 50,000 DWT Despatch Money For vessels of above 50,000 DWT and upto 60,000 DWT Despatch Money For vessels of above 60,000 DWT and upto 70,000 DWT Despatch Money For vessels of above 70,000 DWT and upto 80,000 DWT Despatch Money For vessels of above 80,000 DWT and upto 90,000 DWT Despatch Money For vessels of above 90,000 DWT and upto 1,10,000 DWT Despatch Money 11

12 (C) Despatch money shall be paid by Buyer to Seller and Demurrage by Seller to Buyer in cash in US Currency for each shipment within 50 days after the mutual confirmation of the respective lay days statements. Both parties undertake to confirm the other party s lay day statement or send its revised lay days statements within 30 days from the date of receipt of the lay days statement, failing which the last lay days statement shall be final and binding on both parties. (4) Indemnity for sailing without completion and/or detention Should the vessel be detained ten (10) running days on demurrage at the port of loading, then Buyer shall have an option either to let the vessel sail without completing loading, holding seller liable for dead freight, or to let seller continue loading while holding seller liable for all damages for detention of the vessel. (5) Overtime Seller shall have the privilege of working all available hatches for loading at all times. Vessels to supply light for night work if required, free of expenses to Seller. Overtime shall be for account of the party ordering it. If such overtime is ordered by Port Authorities or any other Government agencies, all extra expenses incurred thereby shall be for Seller s account except ship s crew and officers overtime and expenses of vessels light, gears and winches which shall be for ship owner s account. (6) Lay Days Statement Lay days statement at the loading port shall be prepared on the relative Bill of Lading quantity, which shall be quantity as defined in Paragraph (1) of Article (14) of this contract, and on the basis of the statement of facts made out and signed by Seller and the Master of the vessel and/or the ship owner s agent. Demurrage or dispatch money calculated on the basis of this statement shall be settled in accordance with the provisions as set forth in Paragraph (3) of this Article. (7) Demurrage to Vessel Any loss due to damage to vessels fair, wear and tear except, incurred during the loading at the port of loading due to cause or causes for which Seller is responsible shall be presented in writing by the Master to Seller or its Agents immediately after the damage is sustained, failing with Seller shall be absolved of any responsibility. The extent of damages shall be determined by mutually agreement between the Master of the vessel and Seller or its agents, failing which by a Surveyor or Surveyors appointed by both the parties. Seller shall not be responsible for damage to cargo battens. (8) Non-Performance of Loading In the event of Seller s failure to load the vessel once fixed due to cause or causes for which Seller is responsible, dead freight and/or any extra time and charges incurred by Buyer in diverting the vessel shall be for Seller s account. (9) Exemptions Clauses (A) General Strike Clause Should the loading of the vessel by Seller be obstructed due to strike or lockout directly affecting the loading of the vessel, such time lost shall not be counted as lay time, both in regard to working and waiting vessel(s). 12

13 Such strike or lockout shall, however, be notified by Seller in writing to the Master of the vessel forthwith and shall be stated in the statement of facts mentioned in Paragraph (6) of this Article. It shall also be certified by the Port Trust of Visakhapatnam; which certificate shall be furnished by Seller to the Master of the Vessel or the ship owner s agent by the time the vessel sails from the Port of Visakhapatnam or at the latest within two (2) weeks after occurrence of such strike or lockout. (B) General War Clause If the nation under whose flag the vessel sails should be engaged in war and if the safe navigation of the vessel should thereby be endangered, Buyer and Seller shall have the option of cancelling the relative chartering and allocation and/or obligation to load the Ore in such vessels. If owing to out-break of hostilities the safe navigation of the vessel is endangered, thereby making normal charter or performance thereof impossible, as in the case of Ore loaded or to be loaded or a part of them becoming contraband of war whether absolute or conditional or liable to confiscation or detention according to international law or proclamation of any of the belligerent powers, Buyers and Sellers shall have an option of cancelling the relative chartering and allocation and/or obligation to load the Ore to such extent as may be affected thereby. Should the port of Visakhapatnam be blockaded, the relative chartering and allocation and/or obligation to load the Ore shall be nullified. (C) Stoppage of loading due to breakdown of Mechanical Ore Loading Plant In the event of breakdown of the mechanical ore loading plants, owing to cause or causes which could not be prevented with all the reasonable care of the plant authorities, the lay days statement of the vessel then working and whose loading is made impossible due to such breakdown shall be prepared in the following manner: (a) Lay time shall provisionally be calculated by counting such time lost as lay time. (b) In case the vessel is on dispatch as a result of the calculation as per (a) above, the lay days statement shall be prepared on the basis of such calculation and shall be deemed final. (c) In case, the vessel is on demurrage as a result of calculation as per (a) above, such time lost during the lay time allowed shall be deducted from lay time lost. In case, however, the vessel turns out to be on dispatch as a result of this adjustment, the vessel shall be deemed to be on no dispatch/no demurrage. (d) No such stoppage of loading shall be admitted once the vessel is on demurrage. Seller, however, shall perform its obligations to acquaint buyer with such event(s) in the same manner as provided in Sub-Paragraph (A) of this Paragraph. (D) In the event of any cause or causes prescribed in Sub-Paragraph (A), (B) and (C) of this Paragraph obstructing or being expected to delay the loading of the vessel, Buyer shall have a right to withdraw the vessel once nominated or to sail it without completion if the vessel is already being loaded and no dead freight and/or damage claim shall be on Seller. (E) Other Events If the dispatch of the Ore to the port head is disrupted due to cause or causes beyond the control of the Seller, such an Act of God and strike or lockouts at mines and/or the Railways, Seller shall 13

14 be under obligation to continue the shipment of the Ore to the extent of the available Ore stockpile at port. Seller, shall, by notifying Buyer immediately on occurrence of such event(s) of the tonnage of the Ore which seller then undertake to ship to the extent of the said stockpile, be relieved of its responsibility to perform its obligation for shipment over and above the tonnage thus indicated and to the extent in which the said obligations have been actually obstructed. Similarly, Buyer shall in such an event, be relieved of its responsibility to lift the Ore over and above the same limit. (F) For vessels already on demurrage, any event or events, prescribed in Sub-Paragraph (A), (B), (C) and (E) of this Paragraph shall not relieve seller of its responsibility for loading. (10) Ship Owner s Agent Agents at the loading port shall be appointed by the ship-owners at their expense. Buyer shall notify name of such agent to Seller in advance. ARTICLE (13): MARINE INSURANCE Marine Insurance covering the Ore after it is loaded and boarded the vessel shall be taken out by buyer at its expense. (1) Weighing at loading port A licensed marine surveyor duly appointed by Seller and approved by Buyer shall, at the expense of Seller, conduct the vessel s draft survey at the loading port in accordance with the international practice in respect of each shipment and shall issue a weight certificate stating the wet weight of the shipment. (2) Weight at Discharging Port(s) Upon arrival of each shipment at the discharging port(s), a licensed marine, surveyor duly appointed by Buyer and approved by Seller, shall, at the expense of the Buyer, conduct the vessel s draft survey in accordance with the international practice and shall issue a weight certificate stating the wet weight of the shipment. Such weight certificate shall be final in respect of the weight, provided it is within the difference of one (1) percent from the wet weight certificate issued at the loading port. If the difference is over one (1) percent, the final wet weight shall be the mean of the two certificates (at the loading and discharging ports). The final dry weight shall be calculated by deducting the final free moisture content, determined as set forth in Paragraph (2) of Article (15) from the final wet weight stated in the aforesaid certificate. In the event that it is impossible or extremely difficult to conduct the vessel s draft survey on account of stowage, Seller and Buyer shall decide an alternative method of weight through mutual agreement. Seller s representatives may, at the expense of Seller, be present at the time of weighing at the discharging port(s). The weight thus determined shall be the basis for making out a final invoice. 14

15 ARTICLE (15): SAMPLING AND ANALYSIS (1) Analysis at loading port At the time of loading or each shipment, reputed assayers, appointed by Seller and approved by Buyer, shall take representative samples in accordance with the Indian Standard (IS-1405) adopted on the 20 th December, 1960, subject to any additions and/or amendments to be mutually agreed upon by Seller and Buyer before the shipment commences. The representative samples shall be sub-divided into four portions in accordance with the Indian Standard and one of the portions shall be analyzed to determine the percentages on a dry basis of Iron (Fe), Silica (SiO 2 ), Alumina (AL 2 O 3 ), Phosphorous (P), Sulphur (S), Copper (Cu), Lead (Pb), Zinc (Zn) and other metals, except Mn, Mg and Ca. The size of Ore and the free moisture content at Centigrade as set forth in Article (4). The analysis shall, in principle, be conducted in accordance with the Indian Standard. The cost of such sampling and analysis shall be for Seller s account. Buyer may, at his expense, send his representative to be present at the time of such sampling and analysis. The analysis thus determined shall be the basis of making out a provisional invoice. The Fe and moisture contents so determined shall be advised to Buyer by telegram within seven (7) days after the sailing of the vessel from the loading port. The loading analysis certificate shall be air mailed to Buyer within fifteen (15) days after completion of loading of each shipment at the loading port. (2) Analysis at Discharging Port(s) At the time of discharge of each shipment at the Japanese port(s), a reputed assayer appointed by Buyer and approved by Seller shall at Buyer s expense, take representative samples. The samples shall be taken in accordance with the Japanese Industrial Standards No. JIS M8105 promulgated on 1 st April 1966, subject to any additions and/or amendments to be mutually agreed upon by Seller and Buyer before the shipment commences. Seller s representatives may, at Seller s expense be present at the time the samples are taken. The representative samples shall be sub-divided into four portions in accordance with the Japanese Industrial Standard and one of the portions shall be analyzed. The analysis shall, in principle, be conducted in accordance with the Japanese Industrial Standards. On the basis of the assayer s analysis at the discharging port(s), the assayer shall prepare a certificate stating the percentages on a dry basis of Iron (Fe), Silica (SiO 2 ), Alumina (AL 2 O 3 ), Sulphur (S), Phosphorous (P), Copper (Cu), Lead (Pb), Zinc (Zn) and other metals, except Man, Mg and Ca. The size of Ore and the free moisture content at Centigrade, as set forth in Article (4). Such certificate shall be airmailed to Seller within forty (40) days after completion of discharge of each shipment at the Japanese Port(s). The result of the analysis at the discharge port(s) shall be final. In the vent that there is a difference of over one (1) percent in Fe content between the analysis at the loading and the discharge ports, the final result shall be determined at the mean of the two analysis (at the loading and discharge ports.) In the event of Fe content of Ore on the basis of the destination analysis proving to be less than sixtythree (63) percent, the final result shall be determined on the basis of the mean of the two certificates (at the loading and discharge ports). 15

16 In the event of other chemical compositions on the basis of the destination analysis proving to be over the guaranteed maximum, the final result shall be determined on the basis of the mean of the two certificates (at the loading and discharging ports) In the event that there is a difference of more than one (1) percent in moisture between the loading and discharging ports, the final result shall also be determined at the mean of the two (at the loading and discharging ports). In the event that the size of the Ore does not confirm to the size guaranteed, the final result shall be determined at the mean of the two screen tests (at the loading and discharging ports). (3) Umpire Sampling and Analysis Both at the loading and discharging ports, a portion of the sample shall be retained by the Assayers with themselves duly sealed in the presence of Seller s and Buyer s representatives. In case any dispute arises in respect of the result of the analysis afore mentioned either seller or buyer shall reserve the right to request the other party to determine the final result by an umpire analyst appointed by Seller and Buyer. The cost of the analysis of the umpire sample(s) shall be for the account of the party whose initial analysis shows a greater difference from the umpire analysis. In the event that both parties analysis show an equal difference from the umpire analysis, such cost shall be borne equally by seller and buyer. ARTICLE (16): PAYMENT (1) Letter of Credit Buyer shall establish an irrevocable, transferable, assignable, divisible and confirmed without recourse to drawer Letter of Credit in the United States of America currency in favour of the Regional Office, The Minerals and Metals Trading Corporation of India Limited., Visakhapatnam to cover 100% value of each shipment at least thirty (30) days (or twenty (20) days under unavoidable circumstances) prior to the declared respective shipments(s). (2) Provisional Payment The said Letter of Credit shall be available against Seller s sight draft for provisional payment for the amount of ninety-five (95) percent of the value of the provisional invoice made out on the basis of the analysis at the loading port as set forth in Paragraph (1) of Article (16) and the weight at the loading port as set forth in Paragraph (1) of Article (14), provided that the sight draft is accompanied by the following documents: (a) Seller s provisional invoice made out on the basis of the documents as set forth in subparagraphs (c) and (d) hereunder. In quintuplicate (b) Certificate of origin issued by Seller certifying that the Ore is lumpy hematite Iron Ore of India origin from Bailadila Mines. In triplicates. (c) Loading weight certificates as set forth in Paragraph 91) of Article (14). In triplicates. (d) Loading analysis certificate as set forth in Paragraph 91) of Article (15). In triplicates. 16

17 (e) Full set of negotiable, clean on board, Charter Party Bills of Lading evidencing shipment from the Port of Visakhapatnam to Japan port or ports. (3) Final Payment Buyer shall make final payment for the balance between the final value of the Ore calculated on the basis of the final analysis as set forth in Paragraph (2) of Article (15) and the final weight as set forth in Paragraph (2) of Article (14) and the amount of provisional payment as set forth in the preceding Paragraph (2). Such final payment shall be made through the Letter of Credit against Seller s sight draft and in exceptional cases, by Seller s Bill for Collection or by remittance from Buyer to Seller. The said sight draft or Bill for collection shall be accompanies by the following documents. (a) Seller s final invoice made out on the basis of the final statement of account as set forth in Sub-Paragraph (b) hereunder. In quintuplicate. (b) Final statement of account made out by Buyer or its agent. In quintuplicate (c) Discharging weight certificate as set forth in Paragraph (2) of Article (14). In triplicate (d) Discharging analysis certificate as set forth in Paragraph (2) of Article (15). In triplicate. In case there should be any amount of overpayment due to Buyer established after adjustment have been made as hereinabove it shall be paid by Seller to Buyer in the United States Currency by telegraphic transfer or by any means to be mutually agreed upon within thirty (30) days after Buyer s debit note for such amount of overpayment is received by Seller. ARTICLE (17): PARITY CLAUSE In the event of any IMF parity of the currency for payment in this contract being changed in the future, Seller and Buyer shall, subject to the then applicable legal regulations of the Governments of India and Japan, discuss prices of cargo and amount of Letters of Credit with a view to avoiding a solution. ARTICLE (18): TRANSFER OF TITLE Title with respect to each shipment shall pass from Seller to Buyer when Seller has received the proceeds from the negotiating bank against the relative shipping documents as set forth in Article (16) after completion of loading on board the vessel at the Port of Visakhapatnam, with affect retrospective to the time of delivery of the Ore. Risk with respect to each shipment shall pass from Seller to Buyer when the Ore has been delivered to Buyer in accordance with the provisions of Article (7) of this contract. ARTICLE (19): LOSS OF CARGO In the event of a total or partial loss of cargo after completion of loading on board the vessel and before completion of discharge at the port of discharge, Buyer shall make final payment to Seller on the basis of the analysis at the port of loading as set forth in Paragraph (1) of Article (15) and quantity as manifested on the Bill of Lading. 17

18 In case that the draft survey of the vessel is not completed by a licensed Marine Surveyor after the Ore has been loaded on board, the quantity loaded shall be determined by the Master of the vessel in the presence of Seller s representative(s) in accordance with the international practice. ARTICLE (20): FORCE MAJEURE (1) In the event of delivery of all or any part of the Ore under this contract being obstructed and/or delayed due to or resulting from cause of causes beyond the control of Seller and Buyer, such as prohibition of export and import by Government, refusal to issue export or import licenses, arrests or restraints affected by the rulers, Government of people, war, blockades, revolutions, insurrection, mobilizations, strikes, lockouts, civil commotions, riots, acts of god, plague or other epidemics, destruction of goods by fire or flood or unforeseen blockage of entrance channel of the port, Seller or Buyer shall be relieved of the responsibility for performance of this Contract as per Paragraph (3) hereinafter to the extent to which such performance has been obstructed. (2) In the event that such Force Majeure condition occurs prescribed in Paragraph (1) hereinabove, the party shall advise by cable the other party as soon as possible and then shall, within two (2) weeks after occurrence of such event, furnish the other party in writing with the particulars of the relevant event and documents explaining that its performance is prevented or delayed due to cause or causes as set forth in Paragraph (1) hereinabove and further shall furnish at the same time or at latest within three (3) weeks after occurrence of such event the documentary evidence duly proving such Force Majeure Condition. The party declaring a Force Majeure shall during the duration of such Force Majeure condition use its best efforts to resume the performance of its obligation under this contract with the least possible delay and such party shall always advice the other party detailed progress of the event of Force Majeure and the prospect of settlement of such event and of the resumption of the performance of its obligations under this contract. (3) Seller or Buyer shall be relieved of the responsibility for performance of this contract to the extent to which such performance has been obstructed and if approved by the other party the time of delivery may be postponed for the duration of time, but not longer, in which delivery is prevented by any such cause of causes hereinabove mentioned. (4) In the event that the duration of the postponement of this contract mentioned herein exceeds three (3) months, the other party shall have the option to cancel this contract in respect of the undelivered quantity or extend the period of delivery by mutual agreement. ARTICLE (21): NON DELIVERY Notwithstanding Article (3) of this contract, the period of delivery may be extended by further three (3) months by prior mutual agreement. In the event of failure to affect or take delivery of the quantity as set forth in Article (3) of this contract within the period of delivery as set forth in Article (3) of this contract or within such extended period mentioned hereinabove, due to cause or causes for which Seller or Buyer is responsible, the other party shall have an 18

19 option either to cancel the Contract in respect of the undelivered quantity or accept/supply it at the price under this contract or at the price applicable to shipments in the following year or years whichever is more favorable to that party. ARTICLE (22): ARBITRATION Any dispute which may arise between Seller and Buyer under this contract and which cannot be disposed of by mutual agreement, shall be referred to the arbitration in accordance with the agreement between the Federation of Indian Chambers of Commerce and Industry and The Japan Commercial Arbitration Association regarding the use of arbitration facilities in trade between India and Japan dated the 23 rd May 1955, the award of which shall be final and binding upon both Seller and Buyer. ARTICLE (23): AGENTS Buyer may appoint an agent or agents to carry out all or any of the functions required of them under this contract, provided that the ultimate responsibility shall continue to rest on the party or parties to the contract. ARTICLE (24): TRANSFER Buyer shall be free to transfer all or any part of this contract to other steel mill or mills with the written consent of the Seller. For such transfer, an agreement shall be made separately among Seller, Buyer and the Transferee in the form to be approved mutually. ARTICLE (25): VALIDATION AND ALTERNATION This contract shall become effective as and when the duly authorized representatives of Sellers and Buyers sign thereon. Any change, modification in or addition to the terms and conditions of this contract shall become effective when confirmed by both Seller and Buyer in writing. ARTICLE (26) This contract for Sale and Purchase shall be concluded separately between The Minerals & Metals Trading Corporation of India Limited and each of the Steel Mills of Japan in the same form as hereinabove. ARTICLE (27) The rights and obligations of The Minerals & Metals Trading Corporation of India Limited and the Steel Mills of Japan shall be several and limited within the respective contracts after the conclusion of separate contracts with each of the steel mills of Japan. 19

20 IN WITNESS whereof this contract is made in duplicate at Tokyo and duly authorized representatives or Seller and Buyer having signed them on this day of are retaining one (1). BUYER SELLER The Minerals & Metals Trading Corporation of India Limited Visakhapatnam India ####### END OF CONTRACT ####### 20