PAKISTAN  STEEL
INDIGENIZATION DEPARTMENT

LOCAL IRON ORE SUPPLY CRITERIA

CONTRACT FOR SALE AND PURCHASE OF

“______” MTN  (+/-15%)  LOCAL IRON ORE (LUMP) VIDE CONTRACT NO.

APEO(COMMERCIAL)/LPIOD/LIO/PROC/11   DATED _________

This contract for sale and purchase of “_______” MTN ( +15%) Local IRON ORE is made at Karachi this _Day_^th day of “_Month_”, _”Year”_.

BETWEEN

A.            Pakistan Steel Mills Corporation (Pvt) Limited, a company incorporated under the Companies Ordinance, 1984 having its registered office at Bin Qasim, Karachi  STN # 02-04-7213-006-91 NTN# 34-01-0711555-5

(hereinafter referred to as the “Buyer“) of the 1^st Part)

AND

B.            M/s.___________”NAME OF SUPPLIER”___,

 (hereinafter referred to as the “Seller”) of the 2^nd Part)

WHEREAS the Seller is the Authorized Partner of Mining Lease No. ___________ for mining and sale of Local IRON ORE to Pakistan Steel  from ________  area, District _________   Balochistan;

AND

WHEREAS the Seller has agreed to Sell and the Buyer has agreed to purchase  ______ MTN (+/-15%) Local  IRON ORE  (LUMP) on the terms and conditions as set out in this Contract. The supply will be made by the supplier as soon as possible before __________.

NOW IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERE TO AS FOLLOWS:

1.         DEFINITIONS

 In this Contract, unless the context otherwise indicates or requires, the following words and expressions shall have the following meanings:-

      1.1       “Quantity” has the meaning ascribed to in clause 8.

1.2       “Price” means the price for Iron Ore (Local) set forth in Clause 3.

1.3          “Contract” means this Contract has the meaning ascribed to in clause 8.(ii).

1.4          “Contract Period” means period from _________to__________, commencing from the date of Receipt of Letter of Intent.

1.5          “Delivery Point” means designated site of Pakistan Steel Mills Bin Qasim at Karachi.

1.6          “LOCAL IRON ORE ” has the meaning ascribed to in clause 2.

1.7          “Loading Point” means Mining / Crushing point of LOCAL Iron Ore (Local) at Mining Lease No: for mining and sale of Local IRON ORE in ______   area, District ______   Balochistan;

1.8          “Party” or “Parties” means, as the context requires, either or both the Seller and the Buyer.

1.9       “MT” means Metric Tones of 1000 Kilograms.

1.10     “Weighbridge Receipt” means the weighbridge receipt issued by Pakistan Steel.

2.         SPECIFICATIONS.

The LOCAL IRON ORE (LUMP, FINE & BOULDERS) shall have the following specifications PSS No.0143-2010.

CHEMICAL SPECIFICATION.

SIZE SPECIFICATION

For Boulders

For Lumps

For Fines

3.         PRICE OF IRON ORE

The pricing of above mentioned three grades will be based on prorata ( i.e. on per Fe content) and FOR basis, including the Risks and Costs at the sellers end with prevailing 17% GST &  transportation charges.

Rs 160/- Per Iron content for 60% and above.

Rs 145/- Per Iron content for 58% to 59.99%.

Rs 130/- Per Iron content for 55% to 57.99%.

Rs 115/- Per Iron content for 50% to 54.99%.

NOTE:-

(i)         At Present Pakistan Steel is interested only to sign contracts

             For Iron Ore having Fe content upto 50% minimum.

(ii)            The prices will be valid till the completion of the contract. Sampling of iron ore Lump (06 – 30mm size) will be worked out to establish the quality for payment according to the slab falling in.

(a)        The above rates are for 06 – 30mm size Lump. In case of size exceeding this, penalty of Rs.50/- per ton will be imposed.

b)         In case of size exceeding from 50mm, penalty of Rs. 100/- per ton will be imposed

(b)        Rs.500/- per ton will be paid for supplying specific size material as per Pakistan Steel standard sizes specification for lump and Fine ores.

4.         MODE OF LOCAL IRON ORE INSPECTION

The samples collected from the consignment lot by QCD (Lump) will be analyzed separately on free of cost basis at Process Laboratories of Pakistan Steel. Sampling will be carried out as per approved procedure i.e. collection of sample increments from various portions, sides and depth of each lot of minimum 500 MTN. One sealed umpire sample from each consignment lot will be kept with the seller and the buyer. However the result of the Process Lab of Pakistan Steel will be considered as final & shall not be disputed by the seller for any reason.

5.         PRICE ADJUSTMENT AGAINST DEVIATION FROM SPECIFICATION          

The price of Local Iron Ore will be finally adjusted in accordance with the deviation in the following chemical constituents and the test result of the supplied iron ore (Lump).

PENALTIES

Alumina               0.07 % of the Invoice price Per Dry MT. for each    0.1 % 

                             In excess of guaranteed maximum fraction pro-rata.

Phosphorus          0.07 % of the Invoice price Per Dry MT. for each 0.01 %   

                             in excess of Guaranteed maximum fraction pro-rata .

Sulphur.                0.07 % of the invoice price per dry MT. for each 0.01 % in excess of Guaranteed maximum fraction pro-rata.

Titania                    0.07% of the invoice price per dry MT for each 0.01  % in excess of Guaranteed maximum fraction pro-rata. 

Alkalis                   0.07% of the invoice price per dry MT for each 0.01%  in                             excess of guaranteed maximum fraction pro-rata.

6.         REJECTION LIMIT   

The iron ore is liable to be rejected if it exceeds the chemical specification mentioned hereunder:-

CHEMICAL SPECIFICATION  

Al2 O3             More than 5%

TiO2                More than 1%

S                      More than 0.5%

P                      More than 0.5%

7.                     DETERMINATION OF WEIGHT

(i)         Weighment of each Truck will be made at the weighbridge of PAKISTAN STEEL located at Gate No.09 and will be final for invoicing purposes and such weight shall not be disputed by the seller.   

(ii)        In case the weighbridge at Gate No.09 is not operational due to maintenance or any other reasons then weight will be made at weighbridge located at Gate No.04.

8.         CONTRACT QUANTITY / DELIVERY PERIOD:

(i)         Seller hereby agrees to sell and Buyer agrees to purchase _______ MT (+15%)  LOCAL IRON ORE having Mining Lease No. for mining and sale of Local IRON ORE to Pakistan Steel from  ______   area, District _______    Balochistan;

(ii)        The period of this contract will be from _________ to ________.  Supplies will be commenced within Ten (10) days from the date of signing of the contract.

(iii)       Seller will intimate by fax upon dispatch of each consignment about truck number(s) and other relevant information including loading analyses if any and expected date of arrival at PAKISTAN STEEL.

(iv)       The Seller shall deliver LOCAL IRON ORE as per schedule to the Buyer by Rail/ trucks at the delivery point.  Unloading of material at PAKISTAN STEEL designated site / location, will be Seller's responsibility.

9.         OTHER CONDITIONS:

                 (i)    Adjustment of GST payment if required will also be made against due / balance payment through bill section.

(ii)  Submission of 0.2% Non-Judicial stamp paper / duty against total value of each consignment. 

(iii) The exemption from PBG is only in order to promote indigenization for supply of local material to Pakistan Steel.

10.       TERMS OF PAYMENT

Initially 90% payment against 100% delivery will be drawn by the supplier through Bills department on submission of the following documents:-  

i)        Seller's manually / signed invoice (one original plus five copies showing description of material as per contract indicating NTN, description of material as per contract).

ii)        Material Receiving Voucher (MRV) or Raw Material Receiving Advice (RMRA).

iii)      Rail/Truck receipt duly attested / verified by Raw Material Handling Department.

iv)     Delivery order issued by the Seller on the basis of Pakistan Steel Weightment (s).

v)      Valid Income Tax exemption certificate must be submitted otherwise Income Tax, as applicable as per prevailing government order, shall be deducted from the invoice. / proceeds.

vi)     Prescribed authenticated GST invoice must be submitted with the documents.  4/5^th of the GST amount will be paid by the Seller and 1/5^th of GST amount will be deducted by Buyer Pakistan Steel from the Seller's claim.

vii)    Partial delivery / payment allowed for each lot of 500 MT.

viii)  Final 10% payment will be effective through bills department upon furnishing of the following documents:

a)            Manually signed invoice.

b)            Material Receiving Report (MRR)

c)            Buyer's statement of final account adjustment sheet, to be issued by Indigenization Department against 500 MT/ Lot supply basis.

d)            Bank account Nos. with name of bank and branch.

e)            Professional Tax Certificate for the current year.

11.       FORCE MAJEURE

                 i)      “Force Majeure” shall be any event or circumstance which is not within the control of the Party affected thereby and which causes or results in default or delay in the performance by such affected Party of any of its obligations hereunder and then only to the extent to which such Party, acting reasonably, is not able to prevent or overcome that event or circumstance.  It shall include but not be limited to:

                         a)        Acts of God, including but not limited to cyclones, epidemics, landslides, earthquakes, floods and washouts;

b)            Strikes or other industrial disturbances which prevent the delivery or     acceptance of IRON ORE (LOCAL);

                          c)        Federal Government or Provincial Governmental law, regulation order decree, restriction, restraint, prohibition, intervention or expropriation,

                        or the failure of any Governmental or Semi-Governmental entity to act;

                         d)        Explosion, collision, radiation, act of the public enemy, act of war (declared or undeclared), blockade, riot, civil commotion or disturbance, sabotage, insurrection or national emergency (whether in fact or law);

                 e)    Any other relevant event or circumstances outside the reasonable control of the Party affected thereby;

i)            In the event of Force Majeure, the obligation of the Parties (other than the obligation to make payment due as provided under this contract) shall be excused during the time and to the extent the performance thereof is prevented wholly or in part by Force Majeure.

                        ii)    A Party claiming to be affected by Force Majeure shall:

(a)  Promptly notify the other Party of the occurrence and details of any event or circumstance said to give rise thereto and the estimated nature and extent of the delay in performance of its obligations under this contract resulting there-from.

(b)  The Party affected shall use all reasonable diligence to overcome the effect of the Force Majeure as quickly as possible provided that the settlement of strikes, labour disputes, matters relating to kidnapping,

Extortion or the like shall be at the sole discretion of the Party affected thereby and provided further that the Party affected shall not be obliged to incur expenditure to overcome the events or circumstances which caused the Force Majeure which would make it uneconomic for the Party to continue to be a Party to this contract.  Where a party is prevented from performing an obligation under this contract as a result of Force Majeure and such obligation is to be performed within a given time frame, such time frame shall be extended by the duration of the Force Majeure Period.

(c)    In the event that party affected by this event(s) caused by the Force Majeure are incapable of remedy, and in either case the delivery or acceptance of IRON ORE (LOCAL) at the Delivery Point is prevented, it shall have the right to terminate this Contract upon giving Ten (10) days notice to the other Party.

12.            ARBITRATION

i)              In the event of any question or difference or dispute whatsoever arising between the Parties under or in connection with this contract or any provision herein contained or its constructions hereof, or as to any matter connected therewith or arising there-from which cannot be amicably settled, the same shall be referred to Arbitration under the Arbitration Act, 1940.

ii)          Each Party shall appoint one Arbitrator and the Arbitrators shall appoint an    umpire, by mutual consultation, before the commencement of Arbitration proceedings.

iii)         The Arbitrators and the Umpire shall not be (or have previously been) employee(s), consultant(s), contractor(s) or agents of any Party to the proceedings and shall be independent and/or exhibit no past or present relationship with any Party to the proceedings.

                 iv)        The language shall be English and the venue of the Arbitration shall be Karachi,    Pakistan.

13.            NOTICES

i)      A notice demand, consent or other communication under this contract is only effective if it is in writing and signed and shall be given at such addresses as the Parties shall specify from time to time by written notice.  If sent by registered mail it is taken to have been received on the fifth (5^th) business day after which it is posted.  If sent by fax, is taken to have been received when the addressee actually receives it in full and legible form.

                 ii)     Any Notice hereunder shall be addressed as follows:

      In case of the Seller:

       Address:      

      In case of the Buyer:

      Address:        A/PEO (Commercial)

                              Pakistan Steel Mills,

                              Bin Qasim, Karachi.

                              Fax No.021-34750156

                              Phone No: 021-34750988

iii)            Any party may change its address by giving 7 days written notice to other Party.

IN WITNESS WHEREOF, this Contract has been duly executed by each party on the date first appearing hereinabove:-