Exhibit 10.11
6 February, 1997
MEMORANDUM OF AGREEMENT
CONTRACT YEAR 1997
This MEMORANDUM OF AGREEMENT is made pursuant to the Memorandum dated 2nd August
1996, signed between the Nakornthai Strip Mill Public Company Limited, Thailand
(hereinafter called "Buyer") and MMTC Limited, New Delhi, India (hereinafter
called "Sellers").
Legend: "Contract Year" means the period of 12 months commencing on lst
January in any year and ending on 31st December of the same year. Buyers
and Sellers have mutually agreed to the following:
1. Price:
The FOB price and unit price applicable to Iron ore fines to be delivered in the
Contract Year 1997 shall be as follows:
Ex-Mormugao/Panjim Ex-Madras
Fe Basis 66% 66%
----- -----
FOB Price (US $ per DMT) : 17.45 17.87
----- -----
Unit price (USC per DMTU) : 26.44 27.08
----- -----
2. Quantity:
The quantity to be delivered during the Contract Year 1997 shall be 80,000
MT~100,000 MT between September 1997 to December 1997.
3. Delivery Schedule:
Seller will give a stem confirmation 2 months in advance before commencement of
each quarter. The exact shipment schedule would be confirmed by the Buyer, 45
days before commencement of each quarter.
4. Shipping:
Seller will, as far as possible, sell the cargo to Buyer on C&F basis making use
of Indian bottoms. In case sea freight offered by Seller is not competitive,
Buyer will be free to contract on FOB basis. Before finalisation of contract of
affreightment (C.O.A), Buyer shall give an opportunity to the Seller to match
the rates so that use of Indian bottoms is maximised. Occasionally, to
accommodate the Buyer, shipments could be effected from Madras Port, when
Mormugao Port is closed for fines shipments. Shipments during September to May
shall be effected from Mormugao / Panjim Port only.
5. OTHER TERMS & CONDITIONS:
Detailed terms and conditions shall be as per the Sale Contract MMTC/97/IOS/500
Dated 6th February 1997 between the Buyer and Seller.
/s/ [ILLEGIBLE]
For Nakornthai Strip Mill Public Co. Ltd.,
Thailand
CONT.NO.MMTC/97/IOS/ 500
BUYER: M/s Nakornthai Strip Mill Public SELLER: MMTC LIMITED,
Company Limited. Core 1, Scope Complex,
Chonburi Industrial Estate (Bowin) 7, Institutional Area, Lodi
358 Moo 6, Highway 331, Bowin, Road,
Sriracha, Chonburi 20230 Thailand. New Delhi - 110 003 (India)
FAX # 6638 345696, 375 TLX: 3161045 MMTC IN
TEL # 6638 345689 -92 FAX: 4364106 / 4360365
TEL: 011-4362200
Whereas a Memorandum of Agreement (hereinafter called "MOA") dated 2nd August
1996 has been signed between the Nakornthai Strip Mill Public Company Limited,
Thailand (hereinafter called "Buyer") and MMTC Limited, New Delhi, India
(hereinafter called "Seller"), for supply of iron ore from India, with the
provision that the actual tonnage to be delivered shall be mutually agreed at
the time of price negotiation for each Contract Year between Buyer and Seller.
Legend: "Contract Year" means the period of 12 months commencing on
1st
January in any year and ending on 31st December of the same year.
Whereas, another Memorandum of Agreement dated 6 February 1997(hereinafter
called "MOA-CY97) has been signed between Buyer and Seller for supply of iron
ore for Contract Year 1997.
This contract is made by and between the Buyer and Seller, this 6th February
1997, whereby the Buyer agrees to buy and the Seller agrees to sell the
undermentioned goods for their use in Thailand on the terms and conditions
stated below:
CLAUSE 1 NAME OF COMMODITY : Iron Ore Fines
-----------------
COUNTRY OF ORIGIN : India
PORT (S) OF LOADING : Mormugao/Madras
PORT OF DESTINATION : SRIRACHA PORT, Thailand Or KaoSichang
CLAUSE 2 DELIVERY PERIOD AND QUANTITY
Seller shall deliver to Buyer and Buyer shall purchase from Seller, ore in the
annual tonnage which is mentioned in above said MOA, for each of the Contract
Years 1997 through 2001 both inclusive.
The actual tonnage to be delivered shall be mutually agreed at the time of price
negotiation for each year between Seller and Buyer.
CLAUSE 3 SPECIFICATIONS
CHEMICAL
Fe 66% Basis 65% Min.
A12o3 2% Max.
Sio2 3% Max.
P 0.06% Max.
S 0.02%
Pb Traces
Zn Traces
Cu Traces
-2-
MOISTURE 10% Max
PHYSICAL SIZE :0-10mm
Above 10mm 5% Max.
Below 10mm 95% Min.
CLAUSE 4 PRICE
1.The prices per dry metric ton, F.O.B., stowed, sea worthy trimmed
in US Dollars shall be fixed each Contract Year through mutual
negotiation.
2.The prices to be applied to Ore to be delivered in each Contract
Year shall be discussed and determined by the commencement of each
contract year.
CLAUSE 5 BONUS AND PENALTY
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
Fe content as determined pursuant to the provisions of clause
9 as follows:
Bonus
The base price shall be increased by single prorata of the
price as per clause 4 for each 1% Fe above 66%, fraction
prorata.
Penalty
The base price shall be decreased by single prorata of the
price as per clause 4 for each 1% Fe below 66%, fraction
prorata up to 65%.
The base price shall be decreased by double prorata of the
price as per clause 4 for each 1 % Fe below 65%, fraction
prorata.
B) For Silica
Bonus
At the rate of 5(five) US Cents per dry metric tonne for each
1.0% Silica below 3%, fraction prorata.
Penalty
At the rate of 5(five) US Cents per dry metric tonne for each
1.0% Silica above 3%, fraction prorata.
C) For Alumina
Bonus
At the rate of 5 (five) US Cents per dry metric tonne
for each 1.0% Alumina below 2%, fraction prorata.
Penalty
At the rate of 5(five) US Cents per dry metric tonne for
each 1.0% Alumina above 2%, fraction prorata.
-3-
D) For other elements
If the shipment does not meet any of the chemical
specifications other than Fe, Silica and Alumina, provided in
clause 3 as finally determined in accordance with the
provisions of the clause 9, the base price shall be
increased/decreased as follows fraction prorata.
i) For excess Phosphorus
At the rate of 5(five) US Cents per dry metric tonne for
each 0.01 % in excess of 0.06%.
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%.
E) SIZE PENALTY
US$ 0.50 PER MT on natural basis fraction prorata shall be
applied to the quantities of fines above 10mm in excess of 5%.
F) 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; half of the actual freight attributable to moisture
content over 10% up to 11% including 11% and full actual
freight attributable to moisture over 11 % for fines.
CLAUSE 6 PAYMENT
An acceptable commercial letter of credit in US Currency will be opened by
the Buyer in favour of the Seller with the State Bank of India,
Vasco-da-gama, Post Box No.40, Cable: THISTLE GOA, TLX #.191233 SBI IN,
FAX #. 083451 (for shipments from Mormugao/Panjim) and State Bank of
India, Overseas Branch, 39, Rajaji Salai, Post Box No.5081, Madras-600001,
Cable:OSBRAN Tlx:041-7718 OSBR, 7759 OSOB, 6822 SBOM (for shipments from
Madras). Letter of Credit will be established covering 100% (with
tolerance of 10% more) of the goods of shipment with validity of 90 days
to be extended if necessary. The Letter of Credit would be unrestricted,
without recourse to drawer, confirmed, irrevocable, in favour of Seller
reimbursable through T.T. Charges attendant to the opening, amending and
extending the letter of credit and any other charges levied by the bank
outside India shall be to the account of the Buyers. All charges levied by
the Bank in India would be to Seller's account. No confirmation is
required if the L/C is opened from a first class International Bank like
Deutch Bank. In case L/C is not opened, Buyer can wire transfer 100% of
sale value four (4) weeks prior to commencement of laydays. Load port
results shall be final in all respects. Payment would not be stopped in
case of clerical errors, spelling mistakes and technical discrepancies in
the documents.
CLAUSE 7 DOCUMENTS
Seller shall provide buyer through negotiating and opening banks
after reimbursement of sale proceeds with the following documents:
A) 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.
-4-
B) Five (5) copies of invoice covering 100% value of the goods
(One original and four copies) indicating the contract number,
UC number, name of carrying vessel.
C) Copy of telegram or telex advising shipment according to
clause 12 of this contract.
D) Certificate of Quality and Certificate of Weight of contracted
goods in five copies(One original and four copies) each issued
by qualified assayer at loading port. Certificate of quality
to show actual result of the test of chemical composition and
all other tests called for in this contract.
E) Weight Certificate (One original and four copies) for issued
by qualified surveyor at loading port
Above documents to be distributed as under:
To the negotiating bank (original), A.3 (original), B.3 (One
original and two copies), C.3 copies, D.3 copies(One original and
two copies), E.3 (One original and two copies).
To be sent to the Buyers at port of destination. A.2 non-negotiable
copies, B.2 copies, C.2 copies, D.2 copies, E.2 copies(all
nonnegotiable copies).
CLAUSE 8 WEIGHING
Upon completion of loading of the cargo a surveyor duly appointed by
the seller (in the presence of Captain of the vessel) would
ascertain by draft survey for the quantity of fines at loading port
in accordance with the international practice and will issue a
weight certificate which shall be final. The final dry weight shall
be calculated by deducting the moisture content determined as per
sampling and analysis certificate issued by the assayer at loading
port.
CLAUSE 9 SAMPLING AND ANALYSIS
A) A sample will be drawn according to International rules and
practices at the loading port at the time of loading by one of
the following analysts appointed by the Sellers and approved
by the Buyers.
i) M/s S.G.S. India Ltd.,
ii) M/s Mitra S. K. Pvt.Ltd.,
iii) M/s Itlab Pvt. Ltd.
B) One sample so drawn will be divided into four parts sealed
conjointly with the Buyer's representative if appointed. The
Buyers have the right to appoint their representative at their
own expense to supervise sampling.
C) The first sample will be used for analysis, the second and
third sample will be kept with the sellers and the buyers or
their representative respectively and the fourth sample will
be kept with the sampling firm. The certificates will also
contain a report on mechanical composition of the ore. Loading
port result would be final for all purposes.
-5-
CLAUSE (10) SHIPPING PROGRAMME:
1. Seller shall furnish Buyer for approval thereof with a provisional
quarterly shipping programme for each Contract Year not later than
sixty (60) days before the commencement of the contract year.
2. Seller shall notify Buyer of a definite quarterly shipping programme
which includes provisional monthly programme not later than
forty-five (45) days before the commencement of each quarter.
Such definite quarterly shipping programme, however, shall not
deviate much from the provisional quarterly shipping programme
indicated in accordance with Paragraph (1) hereinabove.
3. Seller shall notify Buyer of a monthly shipping programme not later
than forty-five (45) days before the commencement of each month.
However, such monthly shipping programme shall be, in principle, on
even spread basis of a definite quarterly shipping programme
indicated in accordance with Paragraph (2) hereinabove.
CLAUSE (11) CHARTERING AND ALLOCATION OF VESSELS:
1. Vessels to carry ore under this contract shall be chartered and
allocated by Buyer (or Seller depending upon competitiveness).
2. The vessels' holds shall be clean and free of foreign materials
which might result in admixture and/or contamination of Ore.
3. Buyer shall advise Seller of the vessels' allocation programme for
each month of the quarter not later than forty-five (45) days before
the commencement of each quarter based on the definite shipping
programme notified by Seller in accordance with Paragraph (2) of
Clause (10). Such allocation programme shall include the number of
vessels, rough quantity to be loaded and approximate arrival
position, namely, early or mid or end of the month.
4. Buyer shall notify seller of monthly vessels' allocation programme
together with the name of vessel, the quantity to be loaded (ten) 10
percent more or less at ship's option, the Expected Time of Arrival
of each vessel at the loading port and estimated loaded draft not
later than thirty (30) days before the commencement of each month to
get Seller's confirmation to be given promptly. Buyer shall also
notify Seller of details of vessel including GA plan, air draft etc.
5. While furnishing allocation programme and nominations under
Paragraph (3) and (4) above, Buyer shall make best efforts to ensure
that vessels arrive at evenly spaced intervals.
6. Buyer shall declare to Seller laydays of 7 - 10 days spread for each
vessel not later than twenty (20) days prior to the ETA of each
vessel at the loading port.
7. Buyer shall arrange that the vessel's crew open and close the
hatches and remove and replace the hatch beams as necessary for the
loading at vessel's risk and expense.
8. In the event of any change being made in the vessel's allocation
programme, 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.
-6-
9. Buyer shall arrange that the Master of the vessel gives to the
Regional Office, the MMTC Ltd., Goa/Madras, as the case may be,
three notices of the ETA of the vessel at the loading port; the
first notice to be given five (5) days prior to the ETA of the
vessel along with the stowage plan, the second to be given
forty-eight (48) hours prior to the ETA and the third to be given
twenty-four (24) hours prior to the ETA. In the last notice, the
Master shall advise the approximate quantity of ore required to be
loaded within the tolerance agreed for the vessel.
CLAUSE 12 LOADING TERMS
A) Seller shall deliver to Buyer in bulk, seaworthy trimmed,
alongside Seller's wharf vessel being always afloat to 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.
Normally, the shipping or iron ore fines will be done from the
port of Mormugao/Panjim, but occasionally, ore fines could be
shipped from Madras, specially during the rainy seasons, to
accommodate the Buyer.
For Mormugao Port:
Loading at Berth No.9 or Transhipper Vessels will be at the option
of the Seller
(1) At Berth No.9: Marmugao Outer Harbour:
For vessels of or over 30000 DWT up to 35000 DWT 15,000 WMT
For vessels over 35,000 DWT 20,000 WMT
(II) Loading rate by Transhipper vessel
For vessel of or over 30000 DWT up to 35000 DWF 10,000 WMT
For vessels over 35000 DWT 12,000 WMT
Seller will have the option to load the vessels from Panjim Port
(Near Marmugao) using transhipper vessel (T.V)
For Madras Outer Harbour.
For vessels of or over 30000 DWT up to 35000 DWT 15,000 WMT
For vessels over 35,000 DWT up to 40000 DWT 20,000 WMT
For vessels over 40000 DWT up to 50,000 DWT 30,500 WMT
For vessels over 50000 DWT up to 80,000 DWT 35,600 WMT
C) Notice of readiness to load shall be tendered 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.
Laytime 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
-7-
due to reasons of responsibility of the vessel, such time lost
shall not count as laytime. Stoppage of loading due to
breakdown of the ore loading plant shall not be counted as
laytime.
D) DEMURRAGE/DESPATCH
Demurrage/despatch at the loading port shall be calculated in
accordance with following schedule:
Size of vessel Demurrage per 24 hours day
-------------- (prorata or part)
Up to 35,000 DWT US$ 3,000
Over 35,000 DWT US$ 5,000
Despatch rate will be half of the demurrage rate. Any time
necessarily required by a vessel with draft, when fully loaded up to
permissible draft, at the place of loading, at the port of Mormugao
/ Panjim / Madras, after completion of loading, the wait for the
tide before sailing from seller's wharf shall be counted as time
used in calculating demurrage / despatch money.
CLAUSE 13 ADVISE OF SHIPMENT
Seller shall, upon completion of loading, advise Buyer within one
working day by cable/telex/fax of the contract number, name of
vessel, name of commodity, approximate invoice value, gross weight
and loading date.
CLAUSE 14 INSURANCE
To be covered by 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 13 of this contract.
CLAUSE 15 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 commotions, sabotage, quarantine restriction, acts
of Government, fire, floods, explosions, epidemics, strikes or other
labour trouble affecting either or all aspects of mining,
transportation of ore, port/shipment operations etc, 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 within 15 days of occurrence of any of the
causes mentioned in this clause shall inform the other party of the
existence of the termination 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
-8-
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 16 DISPUTES
Any dispute between Seller & Buyer which cannot be settled by mutual
accord shall be referred to arbitration.
Arbitration shall be conducted on the basis of the Rules of
Conciliation and Arbitration of the International Chamber of
Commerce, Paris. The court of Arbitration will consist of three
members, one appointee by each party within 1 (one) month and the
third selected by the two arbitrators so appointed within 2 (two)
weeks. If the party fails to name its arbitrator within the
designated time, or if the two arbitrators are unable within 2 (two)
weeks to agree on a third arbitrator, the arbitrator or arbitrators
in question shall be appointed in accordance with the Provisions of
the Rules of Conciliation and Arbitration of International Chamber
of Commerce.
The venue of the Court of Arbitration shall be Singapore.
The arbitration award shall be enforceable by the courts of the
country of India or Thailand, as the case may be.
The award shall indicate how to distribute arbitrators' fees and
arbitration expenses between the parties.
The Court of Arbitration shall make its award exclusively on the
basis of this Contract.
CLAUSE 17 SPECIAL CONDITION
It is expressly understood and agreed by and between the buyer and
MMTC that MMTC is entering into this agreement solely in its own
behalf and not on behalf of any other person or entity. In
particular it is expressly understood and agreed that the Government
of India is not a party to this agreement and has no liabilities,
obligations or rights hereunder. It is expressly understood and
agreed that MMTC is an independent legal entity with power and
authority to enter into contracts solely on its own behalf under the
applicable laws of India and general principles of contract law. The
Buyer expressly agrees, acknowledges and understands that MMTC is
not an agent, representative or delegate of the Government of India.
It is further understood and agreed that the Government of India is
not and shall not be liable for any acts, omissions, commissions,
breaches or other wrongs arising out of the contract.
Accordingly, (The parties) hereby expressly waives, releases and
foregoes any and all actions or claims including cross-claims,
impleader claims or counterclaims against the Government of India
arising out of this contract and convenants not to sue the
Government of India as to any manner, claim, cause of action or
thing whatsoever arising of or under this contract.
CLAUSE 18 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 Mormugao/Panjim/Madras, with effect
retrospective to the time of delivery of ore. In
-9-
case of advance wire transfer of 100% sale value, title for such
shipment shall pass from Seller to the Buyer on completion of
loading.
All Risk of loss, damage or destruction to the goods shall pass from
Seller to Buyer when goods pass ship's rail at the loading port, as
they are progressively loaded into the vessel.
CLAUSE 19 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 20 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 21 NOTICES
All communications referred to in this contract shall be in writing
and will be sent by registered airmail and/or by telex, cable, fax,
on the address as follows:
MMTC LIMITED,
Core no.1, Scope Complex,
7, Institutional area, Lodi Road,
New Delhi-110 003.
CABLE : EMEMTICIORE NEW DELHI
TELEX : 031-61045 MMTC IN
FAX: 4364106/4360365
MMTC LIMITED
POST BOX # 37,
VASCO-DA-GAMA-403 802 FAX # 91 0834573283
TLX # 191 201 CABLE: EM2MT1CI
VASCO-DA-GAMA
IN witness whereof this contract is made in duplicate at
Thailand, on this 6th February 1997 and the duly authorised
representatives of the Seller and the Buyer having signed on
this day.
Retained one copy each.
BUYER /s/ [ILLEGIBLE] SELLER /s/ [ILLEGIBLE]
M/S NAKORNTHAI STRIP MILL PUBLIC CO., LTD. MMTC LIMITED
BANGKOK THAILAND. NEW DELHI
-10-