invitation to bid · web viewkorea midland power co., ltd. (hereinafter referred to as...

ITB for KOMIPO-Bid Notice–2014-2(LT)

Invitation To Bid For Bituminous Coal To be Burnt

At Boryeong Power Plant

≪KOMIPO-Bid Notice-2014-2(LT)≫

Korea Midland Power Company Limited

38, Teheran-ro 114-gil, Gangnam-gu, Seoul 135-280, KoreaTel .No. 82-70-7511-1262(1260)Fax No. 82-70-7511-1054

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Table of Contents

Chapter I Bidding Instructions

Clause 1 - General

Clause 2 - Bidding Procedures

Clause 3 - Preparation of Bid Proposals

Clause 4 - Evaluation of Bid

Clause 5- Performance Bond

Clause6 - Special terms and conditions for unloading problem

Chapter II Bid Formats

Clause 1 - Price Proposal

Clause 2 -Technical Proposal

Clause 3 - Technical Proposal

Clause 4 – Certificate of Origin

Chapter III Contract Draft

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Chapter I. Bidding Instructions

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Clause 1 - General

1.1 IntroductionKorea Midland Power Co., Ltd. (hereinafter referred to as “KOMIPO”) duly organized by virtue of the law of the Republic of Korea and having its head office in Seoul, Korea, issues this Invitation To Bid (ITB) to provide Bidders with information in detail on the procedures of and the requirements for Bidding and Contractual terms and conditions.

1.2 Tendering Quantity, Price and Unloading Ports

A. QuantityThe quantity of coal to be purchased is 250,000 Metric Tons (MT). The coal shall be shipped at the port of loading in accordance with the following schedule:In case of Australian, Canadian, S. African and Colombian Coal;

ContractPeriod

Minimum NAR

Yearly Quantity(MT)

Shipping Schedule(1st CY) Price

Oct 2014~ Mar 2017

5,700kcal/kg

250,000(125,000×2)

Q4 2014 : 125,000mt×1Q1 2015 : 125,000mt×1

FOBT, Fixed price

for the 1st CY

In case of Russian Coal;

ContractPeriod

Minimum NAR

Yearly Quantity(MT)

Shipping Schedule(1st CY) Price

Oct 2014~ Mar 2017

5,700kcal/kg

280,000(70,000×4)

Q4 2014 ~Q1 2015: 70,000mt×4

FOBT, Fixed price

for the 1st CY

- Other specification items specified in Clause 1.4 of this ITB shall be fully met by all the

proposals submitted by the Bidders.- 1stCY(Oct 2014~Mar 2015), 2ndCY(April 2015~Mar 2016), 3rd CY(April

2016~Mar 2017)

B. PricePrice shall be on only FOBT and KOMIPO reserves the right to award the contract on a FOB basis subject to its evaluation. Bidders are requested to offer with quotation in a single fixed price for 250,000MT(+/-10% shipping tolerance) or 280,000MT(+/-10% shipping tolerance).

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The Price offered by Bidders is available for the 1st contract year (Oct 2014~Mar 2015). The Price for the 2ndcontract year and the 3rd contract year will be negotiated by mutual agreement. Also, the Price for the 2nd contract year and the 3rd contract year shall be set by mutual negotiation each year no later than 2 months before commencing the next year contract.

C. Unloading Port The coal shall be discharged at Boryeong plant port unless otherwise notified to Bidders.

D. Shipping schedule Bidders shall indicate the preferred Laycan of ten (10) consecutive days within the above shipping schedule. When notifying a successful Bidder, KOMIPO shall inform the laycan of ten (10) consecutive days within the above shipping schedule. KOMIPO and the successful Bidder shall negotiate exact Laycan. Upon mutual agreement on the exact Laycan and the final contract price, KOMIPO shall, at its sole discretion, determine the quantity of coal to be awarded to the successful Bidder(s).

1.3 Coal Mine

Bidder shall guarantee that each shipment of coal to be purchased by Buyer shall be entirely supplied from a single mine in Australia, South Africa, Canada, Colombia or Russia etc. Supply of coal for any shipment from more than 1 (one) mine is not allowed. Upon request by Buyer, a Bidder shall provide relevant supporting documents, to Buyer’s satisfaction, including certificates issued by the relevant authorities of the exporting country and/or the mine owner, to demonstrate the legal status and current situation of the coal mine from which the coal would be supplied. If a Bidder supplies coal from an illegal coal mine, Buyer may reject such shipment of coal without any liability thereof and without any prejudice to its right of being supplied as per agreement between the parties.

1.4 Quality Specifications (based on ASTM standards)

Item Unit Limit of Range

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Total Moisture (TM) (As received basis) % WT Max. 15

Volatile Matter (Air dried basis)Fixed Carbon (Air dried basis)Ash (Air dried basis)

% WT% WT% WT

Min 22∼Max 36Max 60Max 17

Total Sulfur (As received basis) % WT Max 1.0

Grindability (HGI) Min 45(As Received Basis)Gross Calorific ValueNet Calorific Value *

kcal/kgkcal/kg Min 5,700

Nitrogen (Dry ash free basis) % WT Max 2.0Ash Fusion Temperature (IDT) (Reducing Atmosphere) ℃ Min 1,200

CSN(Crucible Swelling Number) Less than 2(0≤CSN¿2)

Ash AnalysisFe₂O₃Na₂O K₂O

% WT% WT% WT

Max 16Max 2Max 3

Size Distribution Above 50mm

Under 2mmUnder 0.25mm

%%%

Max 5Max 40Max 17

- Net Calorific Value = Gross Calorific Value - 5.72 (Har × 9)Where:Har = Hd × (100-TM)/100 + 0.1119 × TM

Har: Total hydrogen on as received basis

1.5 Terms of Payment

Buyer shall determine the payment from either Banker’s Usance Letter of Credit (L/C) or Telegraphic Transfer (T/T) payment basis and notify it to seller. In case a Bidder has specific preference or requirement regarding payment method, it shall declare such fact on its Bidding Proposal for Buyer’s acceptance.

1.6 Compliance with ITB

Bidders shall prepare and submit the Bid Proposal in compliance with the procedures and requirements as provided in this ITB. Any failure to do so may give Buyer a reason to reject or to unfavorably evaluate the Bid proposal. Bidders shall be regarded as having been thoroughly acquainted with and having accepted all the contents of this ITB. Upon submission of Bid documents with no deviation items therewith, Bidders are thereafter regarded as having agreed to

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fully comply with the terms and conditions of the contract as included in this ITB except for the deviation items. In case an awarded Bidder refuses to sign the contract as included in this ITB, Buyer at its sole discretion can ban such a Bidder or its affiliates from participating in the Spot and/or Long-term Bid for at least 1 (one) year.

1.7 LanguageThe Bid Proposal documents shall be prepared only in English.

1.8 Unacceptable BidsAny of the following Bid Proposal may be the reason of rejection by KOMIPO;

(1) Bid which is submitted by a company not qualified for participation in this bidding.

(2) Bid which is submitted after the dead line.(3) Two or more Bids which are submitted by the same mine.(4) Bid deemed by KOMIPOdeviates from the other essential requirements of this

ITB.(5) Bid which contains any material changes whatsoever in the context or any

material additions to the contents of the attached contract, which are not required by this ITB.

1.9 Definition of TermsThe meanings defined in Article 1 of draft contract terms, attached as Chapter III of this ITB shall be applied to the words of terms employed in other Chapters of this ITB, except where the context requires otherwise.

1.10 Notice of Changes in the ITBKOMIPO may notify the Bidders of any amendment or changes of this ITB, if any, and they shall constitute an integral part of this ITB.

1.11 Computation ofTimeUnless otherwise specifically provided in this ITB, the time which is stated in number of days and months, will include Saturday, Sunday and holidays and in case that any specific day falls on Sunday or a holiday, the day will be postponed to the first following business day.

1.12 Confidentiality of BiddingThe prices in the Bidder's Bid Proposal must be issued independently without

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consultation, communication or agreement with any other Bidder or potential Bidder.The prices that have been quoted in the Bidder's Proposal shall not been disclosed knowingly by the Bidder directly or indirectly to any other Bidder or potential Bidder prior to the time Bids are due. No attempt has been made directly or indirectly to induce any other person or firm to submit or not to submit a Bid for the purpose of restricting competition.

1.13 Validity Period of the BidThe price quoted in the Bidder’s Bid Proposal shall be bound as a firm offer and valid for a period of at least five (5) calendar days after the bid closing date. KOMIPO may request the Bidder to extend the validity period of the Bid Proposal, if necessary.

1.14 Additional quantity supplyIn addition, Buyer and Seller reserve the right to increase the total quantity of Coal to be sold pursuant to this Contract provided that the parties can mutually agree on the price, quantity (with additional quantity not more than the total Quantity) and delivery terms for any increased tonnage and the same are in memorialized in a written amendment to this Contract.

1.15 Right to publicize of the awarded priceKOMIPO may, at its sole discretion, release the proposed prices publicly whether they are awarded or not without consent(s) of the Bidder(s).

1.16 Construction of Bid DocumentsShould there any ambiguity or conflict in the Bid Documents exists, KOMIPO’s interpretation shall be final without any liability to any Bidders or 3 rd party. Having said this, KOMIPO strongly urges all Bidders to clearly state all figures and wordings in the Bid Proposal.

Clause 2 - Bidding Procedures

2.1 Qualifications of the BidderCoal producers, marketing companies owned by coal producers or trading companies who have successfully performed coal supply contract of not less than 300,000MT with 5 (five) generation subsidiaries of KEPCO, Tai-power and

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Japanese Power Utilities including J-Power can participate in this Bid. Bidders shall meet the whole requirement of this ITB including but not limited to coal quality specification, shipping schedule, qualityetc.And the Bidders who have no track record of supply to 5 (five) generation subsidiaries of KEPCO, Tai-power, and Japanese Power Utilities including J-Power for the past 3 years (“New Bidder”) cannot participate in this bid.

After being awarded as a successful Bidder, if a successful Bidder fails to enter into making a contract or fails to execute the contract signed, the Bidder will be banned from participating in KOMIPO’s future coal purchasing tender for at least 6 (six) months, which is the KOMIPO’s sole right and could not be challenged by the Bidder under any circumstances.

2.2 Enveloping of Bid DocumentsThe Bid documents as noted in Clause 3.1 shall be sealed in a single envelope marked as “Bid document for ITB No. KOMIPO-Bid Notice-2014-2(LT)” shall be submitted to KOMIPO. The name and address of the Bidder shall be marked on the envelope.

2.3 Submission of Bid DocumentsThe Bid documents shall be submitted in person, by mail or courier to the address below not later than the deadline.

Mr. Min Soo Kim / General Manager / Fuel & Resource TeamProcurement & Cooperation OfficeKorea Midland Power Company Limited38, Teheran-ro 114-gil, Gangnam-gu, Seoul 135-280, Republic of KoreaThe Bid documents which are not completely sealed or submitted by a method other than above noted shall not be accepted.

2.4 Bid Closing DateThe Bid documents shall be submitted no later than 11:00hrs on July 3, 2014 (Korean Standard Time)

Clause 3 - Preparation of Bid Proposals

3.1 Contents of Bid Documents

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The Bid documents shall include the price proposal, coal specification and shipping conditions. Each proposal shall include the following contents and the form in Chapter II shall be used.

(1) Price ProposalBidders shall offer one single fixed price for 250,000MT (+/-10% shipping tolerance) or 280,000MT (+/-10% shipping tolerance) on FOB Port of Loading basis, which shall be delivered during the 1st CY.

(2) Technical Proposal (Specifications)Coal Specifications are to be guaranteed by the Bidder.

(3) Technical Proposal (Shipping Conditions)

(4) Certificate of Origin

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Clause 4 - Evaluation of Bid

4.1 Evaluation Method of Bid Proposals

The Bid Proposal will be appraised by comparing the evaluated CFR prices determined in accordance with the following formula:

Evaluated price =〔CFR price + [Penalty (Sulfur+Ash+Nitrogen+VM)+0.91 〕6,080kcal/kg

Guaranteed NAR

Penalties shall be quoted by the following formulas; - Sulfur = US$2.32/mt Guaranteed Sulfur content (%) - Ash = US$0.02/mt Guaranteed Ash content (%)

- Nitrogen = US$0.34/mt Guaranteed Nitrogen content (%)- Volatile Matter = US$0.10/mt Guaranteed Volatile Matter content (%) if VM is less

than 24%

CFR Price = FOB Price + Freight CostKOMIPO will evaluate Freight Cost by adopting KOMIPO’s internal rate.

And if a Bidder suggests plural loading ports, the farthest from Korea shall be referred as a loading port. Loading rate of each port shall be considered at KOMIPO’s discretion.

4.2 Selection of the Successful BidderEach Bidder's price will be evaluated in accordance with the formula stipulated in clause 4.1. Each Bidder's proposed quantity will be added up in the order of the lowest evaluated price until it amounts to KOMIPO's target quantity. In case the last lowest Bidder's quantity is in excess of the KOMIPO's target quantity, the excessive quantity may be excluded from the contractual quantity at KOMIPO’s sole discretion.In the event that there are two or more Bidders who proposed the same price on anEvaluated Price basis, a Bidder who proposed the largest quantity shall be selected as the successful Bidder.In the event that there are two or more Bidders who proposed the same price on an Evaluated Price basis as well as the same quantity, the Bidder who proposed the highest net calorific value coal shall be selected as the successful Bidder.

4.3 Price Negotiation, Right of Rejection and Re-BiddingThe lowest price Bidder shall be selected as the successful Bidder, but in the event that the Bidder's evaluated price is over the target price of KOMIPO, both

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parties shall negotiate the price. Should KOMIPO and the lowest price Bidder fail to reach an agreement on the price, KOMIPO may, at its sole discretion, decide not to select even the lowest price Bidder as the final awarded Bidder.KOMIPO reserves the right, at any time without any liability, to reject any part or allthebid proposals, to withdraw this bid itself, to increase or decrease the awarded quantity of Coal and to request rebidding, when any of them is necessary for the best interests of KOMIPO.Bidder's claim for compensation with regard to the rejection, withdrawal and rebidding shall be void and of no effect. KOMIPO has no liability in any kind whatsoever regarding aforementioned rejection, withdrawal, rebidding, increase/decrease of awarded quantity of coal.

4.4 Appointment of Final AwarderAward notice shall be made after reaching an agreement on the contract price and shipping schedule adjustments between KOMIPO and the lowest price Bidder. KOMIPO may also consider, at its sole discretion, comprehensive terms of the contract such as price, reliability of supply and coal specifications when selectsa final awarded Bidder(s).

4.5 Signing of the ContractFinal awarder of the Clause 4.4 above shall sign the actual contract no later than

20 days upon the receipt of formal notice of award from KOMIPO.

Clause 5 – Performance BondThe awarded Bidder shall establish a performance bond in favor of KOMIPO within seven (7) days after receipt of the Price Term Notice from KOMIPO after an agreement on the contract price and shipping schedule adjustments in an amount not less than 10% (ten percent) of sum amount of each shipment. The performance bond shall be in the form of irrevocable clean letter of credit or bank guarantee issued by a first class international bank with the condition that Korean Bank in Korea reissue Bank Guarantee or the Guarantee Certificate issued by Guarantee Insurance Company. The awarded Bidder shall be exempted from this Performance Bond obligation if it has successful track record of supply more than 150,000MT in total to 5 Korean Gencos, JPUs including J-Power, FPG and Tai-power in recent three (3) years.

Clause 6 – Special terms and conditions for unloading problem

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In case the coal delivered to the discharging port(“Boryeong port”) is incapable of being unloaded, in spite of the utmost efforts by KOMIPO, Buyer may have the right to designate the Inspection Agency to investigate the exact causes of the unloading problem with Seller’s written consent of such designation. The cost required for the investigation shall be borne by Buyer. Buyer shall continually make an effort to unload the relevant coal as soon as possible during the investigation. The result of the investigation shall be binding on both parties and the basis of the sharing ratio of incurred costs including demurrage and trimming work etc.

Chapter II. Bid Formats

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Clause 1 - Price Proposal

KOMIPO-Bid Notice-2014-2

, undersigned, hereby offers to supply coal for Korean power plants within the Laycan at the loading port in accordance with the ITB (KOMIPO-Bid Notice-2014-2).

Mine: 1

Loading port:Validity: a period of 5 (five) calendar days after the bidding closing date

Classification Bidding Quantity(MT) Shipping Schedule Price

L/T(Long TermContract)

FOBTUS$ per MT

On kcal/kg NAR basis.

To : Mr. Min Soo Kim / General ManagerFuel& Resource TeamProcurement & CooperationOfficeKorea Midland Power Co., Ltd.

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* The coal to be delivered shall be entirely supplied from a single mine.

Date :Bidder :Address :Tel No. :Fax No. :Signed by : (Authorized Signature)

(Printed Name)(Title)

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Clause 2 - Technical Proposal (Specifications)

KOMIPO-Bid Notice -2014-2Item Unit

Bidder's Guaranteed

Quality

Total Moisture (As received basis) % WT

Moisture (Air dried basis) % WTVolatile Matter (Air dried basis) % WT

Fixed Carbon (Air dried basis) % WT

Ash (Air dried basis) % WT

Total Sulfur (As received basis) % WT

Grindability (HGI)

(Dry Basis)Hydrogen (Hd) % WT

Gross Calorific Value (Air dried basis)Gross Calorific Value (As received basis)Net Calorific Value (As received basis)※

kcal/kgkcal/kgkcal/kg

Nitrogen (Dry ash free basis) % WT

Ash Fusion Temperature IDT (Reducing Atmosphere)

℃

CSN(Crucible Swelling Number)

Ash AnalysisFe₂O₃ % WTNa₂O % WT K₂O % WTSize Distribution Above 50mm Under 2mm Under 0.25mm

%%%

All items above shall be determined in accordance with the appropriate ASTM (American Society for Testing and Materials) standards.

※ Net Calorific Value = Gross Calorific Value - 5.72 (Har 9) Where: Har = Hd (100-TM)/100 + 0.1119 TMHar: Total hydrogen on as received basis.

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Clause 3 - Technical Proposal (Shipping Conditions)

KOMIPO-Bid Notice -2014-2

NAME OF BIDDER: NAME OF COAL MINE (INCLUDING COUNTRY NAME):

- PRODUCTION CAPACITY: MTPA NAME OF LOADING PORT: CAPACITY OF LOADING PORT

- CAPE SIZE: - PANAMAX SIZE:

TYPE OF VESSEL : GEARED OR GEARLESS: LOADING CONDITION

- LOADING RATE: - DEMURRAGE / DISPATCH: shall be applied as per charter party- NOTICE OF READINESS TO LOAD:- TURNTIME:- LOA : BM : DFT :

This shipping condition should be general rule of the Loading port and shall be inserted into the Contract to be made between KOMIPO and the Bidder accordingly.

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Clause 4 - Certificate of Origin

KOMIPO-Bid Notice -2014-2

We, the undersigned, do hereby jointly certify to the effect that the information relating to the shipment of coal described below is true and correct and that shipment of coal was exclusively mined from the coal mine with the name as _______________________________________________ located in the country of _________________ at the address of , which is owned / operated by the undersigned Coal Mine Owner/ Coal Producer.

(1) Coal Mine Owner/Coal ProducerCompany Name: ___________________________

Signed by:__________________________ *1

(Authorized Signature)Name:Title:Date:

(2) Seller Company Name: _________________________Signed by:___________________________

(Authorized Signature)Name:Title:Date:

*1 If the signature of the authorized officer of the Coal Mine Owner/Coal Producer has not been certified as authentic by a Notary Public, this Certificate of Origin shall be unacceptable.

※ Bidders who have had coal supply record more than 120,000MT shall be exempted from submission of this Certificate of Origin.

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Chapter III. Contract Draft

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BITUMINOUS COAL SALE AND PURCHASE CONTRACT(KOMIPO–2014–LT01)

NOTICE:

This draft contract shall be adjusted mutatis mutandis when any kind of discrepancy or inconsistency is found between this draft contract and other clauses of this ITB.

Between Korea Midland Power Company Limited

AndSeller’s name to be nominated

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BITUMINOUS COAL SALE AND PURCHASE CONTRACT

This Bituminous Coal Sale and Purchase Contract (“Contract”) is made on the th day of by and between Korea Midland Power Co., Ltd. (“KOMIPO”), a corporation organized and existing under and by virtue of the laws of the Republic of Korea with its principal office located at 38, Teheran-ro 114-gil,Gangnam-gu, Seoul, Korea (hereinafter referred to as the "Buyer") and with its principal office located at (hereinafter referred to as the "Seller").Buyer and Seller shall be referred to as respectively “Party” and collectively “Parties”.

RECITALS

A. WHEREAS, Seller shall supply coal produced in mine.B. WHEREAS, Seller intends to sell certain quantities of Coal to Buyer as set forth herein.C. WHEREAS, Buyer intends to purchase, for use as fuel at its coal-fired power plants, certain quantities

of Coal from Seller as set forth hereinD. WHEREAS, Buyer and Seller agree that the following documents shall constitute an integral part of

this Contract:

1. This (SUB-)BITUMINOUS COAL SALE AND PURCHASE CONTRACT 2. BIDDING INSTRUCTIONS of ITB for KOMIPO-Bid Notice-2014-2as posted and amended before

the closing of the Bid Process in KOMIPO’s Website at http://www.komipo.co.kr/english3. PRICE PROPOSAL as proposed by Seller4. TECHNICAL PROPOSAL (SPECIFICATIONS) as proposed by Seller5. TECHNICAL PROPOSAL (SHIPPING CONDITIONS) as proposed by SellerIn case above documents found to be inconsistentamong them, precedence shall be given in numerical order of the list above.NOW THEREFORE, in view of the foregoing premises and in consideration of the mutual covenants and agreements hereinafter set forth, the Parties hereby agree as follows:

TABLE OF CONTENTS

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http://www.komipo.co.kr/english


ARTICLE 1 DEFINITIONS

Article 1 Definitions……………………………………………………………

Article 2 Quantity ……………………………………………………………

Article 3 Quality ……………………………………………………………

Article 4 Determination of Quantity and Quality……………………………………………………………

Article 5 Rejection ……………………………………………………………

Article 6 Base Price……………………………………………………………

Article 7 Adjustment of the Price for Quality……………………………………………………………

Article 8 Payment……………………………………………………………

Article 9 Delivery……………………………………………………………

Article 10 Liquidated Damages……………………………………………………………

Article 11 Warranties with Respect to Coal Quality……………………………………………………………

Article 12 Force Majeure……………………………………………………………

Article 13 Termination……………………………………………………………

Article 14 Transfer of Title and Risk……………………………………………………………

Article 15 Dispute and Arbitration……………………………………………………………

Article 16 Governing Law……………………………………………………………

Article 17 Assignment……………………………………………………………

Article 18 Effective Date……………………………………………………………

Article 19 Waivers……………………………………………………………

Article 20 Notices……………………………………………………………

Article 21 Entire Agreement……………………………………………………………

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The following terms when used in the Contract shall have the meanings as stated below (and definitions of certain terms which are given in the preamble and in other Articles of the Contract shall have the same meanings as those stated in this Article):

(1) "Coal" shall mean the Bituminous coal mined . (2) "FOBT" shall refer to the completion of loading of the coal in the vessel designated by the Buyer at

the loading port including the trimming work. (3) "Trimming work" herein shall mean any and all work of trimming by manpower, spouts or such

mechanical trimmers as may be available at the loading port. (4) "Ton(s)" shall mean metric ton(s). (5) "US$” shall refer to the lawful currency of the United States of America. (6) "Year" shall mean calendar year starting from January 1 and ending on December 31 or contract year

according tomeanings of each context.(7) A fraction of a cent in any calculation shall be rounded up to a cent if such fraction is one half of a

cent or more and shall be rounded down if otherwise. (8) A fraction of a ton in any calculation shall be rounded up to a ton if such fraction is one half of a ton or

more and shall be rounded down if otherwise.

ARTICLE 2 QUANTITY

The quantity of Coal which is the object of the sale and purchase shall be Base quantityMetric Tons plus or minus ten (10) percent shipping tolerance. If the quantity of coal shown in ocean Bill of Lading is greater thanBase quantity x 1.1 Metric Tons, it shall be treated as Base quantityMetric Tons x 1.1unless otherwise agreed.

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ARTICLE 3 QUALITY

The quality of Coal to be supplied hereunder shall be as follows.

○Each item above shall be determined in accordance with the appropriate American Society for Testing and Materials standards.

Net Calorific Value = Gross Calorific Value - 5.72 (Har ×9) Where:Har = Hd×(100-TM)/100 + 0.1119 ×TM

Har = Total hydrogen on as received basis

Item Unit Limit of Range

Seller's Guaranteed

Quality

Total Moisture (As received basis) % WT

Volatile Matter (Air dried basis) % WT

Fixed Carbon (Air dried basis) % WT

Ash (Air dried basis) % WT

Total Sulfur (As received basis) % WT

Grindability (HGI)(Dry Basis)Hydrogen (Hd) % WT

Gross Calorific Value (Air dried basis)Gross Calorific Value (As received basis)

Kcal/kgKcal/kg

Net Calorific Value (As received basis)* Kcal/kg

Nitrogen (Dry ash free basis) % WT

Ash Fusion Temperature IDT (Reducing Atmosphere)

℃

CSN(Crucible swelling number)

Ash Analysis

Fe₂O₃ % WT

Na₂O % WT

K₂O % WT

Size Distribution Above 50mm %

Under 2mm Under 0.25mm

%%

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ARTICLE 4 DETERMINATION OF QUANTITY AND QUALITY

4.1.1 The determination of the quantity and quality of Coal at the loading port by a third party independent inspection agency of an international standing(“Agency”) shall be final. Seller has the right to designate the Agency and has to get Buyer’s written consent of such designation, which consent shall not be unreasonably withheld. The original certificates of the Agency’s determination of quantity and quality should be forwarded to Seller upon issuance thereof. The costs required for the determination of the quantity and quality certification thereof shall be borne by Seller. Seller shall be responsible for providing all the arrangements in order that the Agency can complete all the assignments required under this Article 4.

4.1.2Determination of the weight of Coal on the vessel shall be determined at Loading Port by the Agency who shall issue a Certificate of Weight based on the determination of weight of the delivery of coal by draft survey of the vessel. Such Certificate of Weight shall be the weight put on the Bill of Lading and shall be final and binding on both parties. The weight certified in the Certificate of Weightshall be the basis of the payment for each shipment of Coal as per Article 6.

4.2.1Determination of the quality of Coal on the vessel shall be determined by reference to a Certificate of Analysis to be issued by the Agency made through sampling, reduction and analysis to be performed in accordance with the ASTM Standards and the quality certified by the Agency shall be the basis for determination of the amount payable by the Buyer for each shipment.

4.2.2 Seller shall arrange three (3) sets of sample to be used in determining the quality of each shipment, which shall be sent to:

one (1) sample to Agency for Loading Port analysis

one (1) sample to Buyer (“Buyer’s Sample”)

one (1) sample to Agency for retention in case of umpire analysis

in a suitable air tight container properly sealed and labelled until sixty (60) days

after the loading of the vessel.

Seller shall send Buyer’s Sample to Boryeong Power Plant by coal carrier, air mail or another way agreed by the Parties hereto through a necessary arrangement with the Agency. The one (1) umpire sample shall be retained by the Agency in a suitable airtight container properly sealed and labeled until ninety (90) days after completion of loading.

4.3.1 In the event that Buyer wishes to challenge the result of any analysis made at the loading port by the Agency, Seller shall arrange the one (1) umpire sample to be promptly delivered to and analyzed by an independent laboratory (“Umpire Agency”) which shall be appointed by Buyer at Seller’s cost. The analysis results of the Umpire Agency shall be final and binding on both parties for both parties. Neither Party can challenge the results.

4.3.2 The analysis results of the Umpire Agency shall be the new base of determination of amount instead of Clause 4.2.1 to be paid to Seller in accordance with Article 4, 7 and 8.

4.3.3 Buyer shall have the right to cause itself or its designee(s) to attend and observe the procedures for the determination of the quantity and/or quality of Coal at the loading port at any time at the expense of Buyer. In such an event, Seller shall cooperate with such attendance and observation.

ARTICLE 5 REJECTION

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5.1 If the quality of loaded Coal as determined pursuant to the quality analysis at the loading port pursuant to Article 4 is outside the limits of the range as specified in Article 3, Buyer shall have (in addition to other rights the Buyer may have under this Contract and by operation of the law) the right to reject such inferior (“Reject Coal”) by serving notice to the Seller in writing as soon as possible coal irrespective of whether the loaded coal sailed from loading port or not without any liability to Seller or any third party including shipper related to such rejection. In the event that the quality is outside the limits of range as specified in Article 3, Buyer has the right to accept, but not the obligation thereto, the Coal at its sole discretion if it judges that Coal can be used in its Boryeong Power Plant. In this case price shall be mutually agreed irrespective of the quality determined in accordance with other Articles of this Contract in a fair, reasonable and equitable settlement. For the avoidance of doubt, Buyer has no liability in failure to find an agreeable price by and between the Parties. The Buyer will offer reasonable assistance, if practicable, for the Seller to transport the rejected shipment to other destinations including the necessary liaison with the ship-owner.

5.2 If Buyer rejects the Coal as per Clause 5.1 above, Buyer shall bear no obligation to unload the Coal until it has determined an appropriate course of action with respect to such shipment and Seller shall be responsible for any third party claims against Buyer including without limitation any demurrages incurred with respect to the vessel carrying such Coal and any other vessels whose unloading are delayed in sequential order as a result of a delay in unloading the vessel carrying such Coal. Title and risk to all Reject Coal shall revert to the Seller on the date the notice described in Article 5.1 above was given.

5.3 All costs and responsibility incurred to Buyer and Seller as a result of the rejection of Coal pursuant to Section 5.1

shall be borne by Seller. However, Buyer and Seller shall co-operate to minimize the Seller’s costs, if practicable.

5.4 In the event that a shipment of coal fails to meet the minimum and/or maximum specifications set forth in this Contract, in addition to other remedies available to Buyer, Buyer shall have the right to disqualify Seller from participating in spot and/or Long term tender(s) for a period of one (1) year. Such period shall commence from Buyer's notice of such disqualification.

ARTICLE6 BASE PRICE

The Base Price of coal delivered under this Contract shall be US$ per ton FOB Loading Port based on kcal/kg net calorific value on an as received basis at the port of.

ARTICLE7 ADJUSTMENT OF THE PRICE FOR QUALITY

7.1 The Base Price of Article 6 shall be adjusted by increase and/or decrease pursuant to Sections below.

7.2 Net Calorific Value (as received basis)

There shall be no adjustment so long as the certified net calorific value (NCV) of Coal , as stated in the Certificate of Analysis, is not less than (Seller’sGuaranteed Specification for NCV-50) kcal/kg and not more than (Seller’s Guaranteed Specification for NCV+50) kcal/kg.

In the event the certified net calorific value of Coal is less than (Seller’s Guaranteed Specification for NCV-50) kcal/kg, the Base Price per ton shall be reduced by the amount calculated by the following formula:

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(Amount of reduction) = Seller’s Guaranteed Specification for NCV - Y

Base Price × x1.1 Seller’s Guaranteed Specification for NCV

In the above formula, "Y" shall refer to the certified net calorific value (as received basis) as determined pursuant to Article 4 of this Contract. In the event the certified net calorific value of Coal is in excess of (Seller’s Guaranteed Specification for NCV+50) kcal/kg, the Base Price per ton shall be increased by the amount calculated by the following formula:

(Amount of increase) = Y- Seller’s Guaranteed Specification for NCV

Base Price xx 0.9 Seller’s Guaranteed Specification for NCV

In the above formula, "Y" shall refer to the certified net calorific value on (as received basis) as determined under Article 4 of this Contract.

7.3Sulfur (as received basis) In the event the certified total Sulfur content of Coal exceeds Guaranteed Specification for Sulfur, the Base Price per ton shall be reduced by the amount calculated by the following formula: (Amount of reduction) =

Y - Seller’s Guaranteed Specification for Sulfur

3% of the (Base Price) x 0.1%

In the above formula, "Y" shall refer to the certified total sulfur content (as received basis) asdetermined pursuant to Article 4 of this Contract.

7.4 Ash (air dried basis) In the event the certified total ash content exceeds Seller’s Guaranteed Specification for ash (air dried basis), the Base Price per ton shall be reduced by the amount calculated by the following formula: (Amount of reduction) =

Y – Seller’s Guaranteed Specification for Ash 3% of the (Base Price) x

1.0% In the above formula, "Y" shall refer to the certified ash content (air dried basis) as determined pursuant to Article 4 of this Contract.

7.5 Nitrogen In the event the certified Nitrogen content exceeds Seller’s Guaranteed Specification for Nitrogen(Dry ash free basis), the Base Price per ton shall be reduced by the amount calculated by the following formula: (Amount of reduction) =

Y – Seller’s Guaranteed Specification for Nitrogen 3% of the (Base Price) x

0.6% In the above formula, "Y" shall refer to the certified Nitrogen content (Dry ash free basis) as determined pursuant to Article 4 of this Contract.

7.6 Volatile Matter(Air dried basis) (Amount of reduction) =

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Seller’s Guaranteed Specification for Volatile Matter - Y1% of the (FOBT Price) x

1.0%

In the above formula, "Y" shall refer to the certified VM content (air dried basis) as determined pursuant to Article 4 of this Contract. If above “Y” is more than 24%, this penalty clause shall not be applied.

ARTICLE 8 PAYMENT

8.1 Payable amount of each shipment

Unless otherwise agreed between the Parties hereto, payable amount of each shipment shall be calculated as follows:Base Price (as adjusted according to Article 7) multiplied by Metric Tonnes as shown in Ocean Bill of Lading of each shipment as determined by Clause 4.1.2

8.2 Unless otherwise agreed between the Parties hereto, any and all payments by Buyer to Seller shall be made in U.S. Dollars for each shipment of Coal and the payable amount shall be calculated as follows:

(1) The price of Coal for each ton The price in US$ fixed pursuant to the provisions of Article 4 (Determination of Quantity and Quality), Article 6 (Price) and Article 7 (Adjustment of the Price for Quality); and

(2) Quantity to be paid The quantity determined pursuant to the provisions of Article 4 (Determination of Quantity and Quality); and

(3) The amount payable in US$ for each delivered shipment The price of Coal for each ton multiplied by the quantity to be paid

8.3 Buyer shall determine the payment terms from either Banker's Usance Letter of Credit payment basis or Telegraphic Transfer (T/T) payment basis and notify it to Seller.

8.4.1 In the case of Banker's Usance Letter of Credit payment basis, Buyer shall establish an irrevocable Letter of Credit through a commercial bank in favor of a beneficiary nominated by Seller with a telegraphic transfer reimbursement clause no later than seven (7) days prior to the scheduled arrival date of the vessel at the loading port notified pursuant to Article 9. Advising and Negotiating bank shall be selected through mutual agreement between the Parties.

8.4.2 The Letter of Credit established by Buyer shall include the following matters; (1) Amount

Reasonable amount in United States currency, adequate to reimburse Seller for the maximum amount of Coal to be shipped in such a vessel pursuant to the terms of this Contract. Each Letter of Credit shall include the provisions to be used for the calculation of the price.

(2) Time of Payment: At Sight or other at Buyer’s sole discretion (3) Expiry date: Not less than four (4) months after the establishment of the Letter of Credit. (4) Seller shall receive payment against such Letter of Credit with the following original

documents;

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1) Commercial Invoice signed by Seller, indicating the basis of the calculation of the payable amount in triplicate, and

2) Full set of negotiable clean ‘on board’ ocean Bills of Lading certifying the loading of Coal in the quantity as stated in the Certificate of Quantity issued pursuant to Article 4, and

3) Certificate of Quantity (including draft survey report), Sampling and Analysis in accordance with the provisions of this Contract in triplicate, and

4) Certificate of Origin in triplicate. (5) All banking charges including postage incurred outside Korea shall be for the account of the

Seller.(6) Special instructions: Adjustment of the price based on Net Calorific Value, Sulfur and Ash.

8.4.3 Within three (3) working days after the issuance of the Bill of Lading, Seller shall promptly notify to Buyer the following details of shipment by telex, facsimile or cable.

(1) The quantity and the quality specified in the Certificate of Quantity and Analysis referred to in Article 4, and (2) The details of calculation of the payable amount referred to in the Commercial Invoice, and(3) The date and the number of Bill of Lading, the name of the vessel and the date of completion of the loading stated therein.

8.5.1 In the case of Telegraphic Transfer (T/T) payment basis, payments shall be made by means of remittance to the bank account nominated by Seller. Such payments shall be made to Seller's drawing bank within seven (7) Korean Bank working days after Buyer's receipt of original shipping documents.

Seller shall present the following original documents to Buyer; (1) One original and two copies of Seller’s commercial Invoice signed by Seller, indicating the

basis of the calculation of the payable amount; (2) Full set of three original Bills of Lading and three non-negotiable copies “Clean on Board”

Bills of Lading marked “Freight Payable as per Charter Party” and, if required, endorsed in favour of the Buyer or the Buyer’s Bank. certifying the loading of Coal in the quantity as stated in the Certificate of Weight issued pursuant to Article 4;

(3) One original and three copies of the Certificate of Weight issued by the Agency;(4) One original and three copies of the Certificate of Draft Survey issued by the Agency(5) One original and three copies of the Certificate of Analysis issued by the Agency;(6) One original Certificate of Origin issued by the relevant government authority One copy of the aforementioned documents shall be sent by fax to Buyer promptly upon completion of the loading.

8.5.2 All banking charges in connection with the remittance as set out herein shall be for the account of Buyer. All banking charges including acceptance commission incurred at Seller's drawing bank shall be for the account of Seller.

ARTICLE 9 DELIVERY

OCEAN TRANSPORTATION

9.1 The Buyer is responsible for providing the vessel for the loading of coal to be delivered under this Contract. The delivery of the total quantity of coal shall be made by the Seller to the Buyer within the Delivery Period. Seller shall arrange Coal to be loaded, stowed and trimmed to the master’s satisfaction under supervision of the master free or risk, expense and responsibility to the vessel and the Buyer..

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9.2 The Seller shall load the coal into the vessel’s holds at the minimum rate of xxtonnes per weather working day of twenty four (24) consecutive hours SHINC except for holidays below.

(i) tba

(ii) tba

(iii) tba

(iv) tba

9.3 Buyer shall nominate a suitable performing vessel to the Seller for Seller’s acceptance not less than 14 days prior to the first day of the Delivery Period (“Initial Vessel Nomination”). The Buyer will submit the following details along with the Vessel Nomination: Name of the vessel Estimated (or, Actual) time of departure from previous port Estimated Time of Arrival at XXX Port Nomination of the Shipping Agent, PIC and full style address

Seller shall reply within 24 hours after reception thereof. Such acceptance shall not be unreasonably withheld. Any vessel substitution shall be nominated at least 5 days prior to the Delivery Period provided that the tonnage is as per Article 2 and other characteristics of the vessel are similar to the original nomination. A nominated vessel can only be substituted if the Port Manager or his designate approves the substitute vessel which satisfies xxx Port’s quality requirements.

9.4 Buyer shall notify Seller 7/5/3 days, 48 hours and 24 hours prior to the ETA of the vessel at the port of loading.The Buyer or its agents shall notify the Seller of any deviation in excess of 24 (twenty-four) hours to the aforementioned arrival. The Buyer will furnish to the Seller, to be submitted to the Port Manager, the following information on the vessel at least three (3) working days prior to ETA of vessel: Details of the previous cargo; and, Total de-ballasting required

Stowage Plan to be advised to Seller five (5) days prior to Delivery Period. The Seller is required to distribute its cargo evenly across holds.

LAYTIME, DEMURRAGE AND DESPATCH

9.5 Written Notice of Readiness to load at the Loading Port may be tendered by the vessel or vessel's agent after vessel's arrival at the Loading Port, and when in free pratique, whether in berth or not,at any time day or night, Saturdays, Sundays, and holidays included except for the 4 major holidays stipulated in Clause 9.2. Vessels which arrive after the Delivery Period has ended shall lose their turn of arrival and the time of berthing shall be at the discretion of xxx Port.

9.6Laytime at Loading Port shall commence twelve (12) consecutive hours after the vessel arrives at anchorage and is ready on all respects to load and Notice of Readiness is tendered by radio or cable to the Seller or its agents,, whether in berth or not, whether in free pratique not, whether customs cleared or not (NOR time) but, if customs is not cleared or free pratique not granted subsequently due to vessel’s fault, laytime shall stop counting until such formalities are cleared. If the vessel commences loading before the expiring of NOR time, laytime shall count from the time vessel commences to load.

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9.7 DEMURRAGE/DESPATCH

9.7.1 Time attributable to any of the following shall not count against the Laytime; but if the vessel is on demurrage then demurrage will continue to accrue irrespective of the below (once on demurrage always on demurrage).

(a) any period during which the vessel is required to wait off the Loading Port before the Notice of Readiness is tendered;

(b) any time lost in completing administrative port arrival procedures for vessel;

(c) any time lost as a result of the owner or operator of the vessel or any governmental authority or port authority preventing, impeding or prohibiting loading;

(d) breakdown, inefficiency, repairs or any other inability of the vessel or tugboats or pilots to allow loading of the coal within the laytime; or

(e) delay or suspension of loading caused by Force Majeure, as defined in Clause 15 below.

9.7.2 If the laytime used exceeds the laytime allowed, the Seller shall pay demurrage to the Buyer for all such excess time at the rate as stipulated in the charter party per day pro rata. The demurrage/dispatch money is as per Charter Party.

9.7.3 If the laytime used is less than the laytime allowed, the Buyer shall pay despatch to the Seller for all time saved at the rate equal to 50% of the demurrage rate per day pro rata.

9.7.4 The Buyer shall ensure that any demurrage payable in accordance with its contract of carriage of the coal to the Loading Port shall be levied at a reasonable rate commensurate with rates customarily payable from time to time in respect of similar vessels.

9.7.5 Notwithstanding the above, the Seller shall not be liable for demurrage and the Buyer shall not be liable for despatch unless notice of a claim, with the relevant supporting documentation is provided to the other party within (30) days after completion of loading. If no claim is notified in accordance with this clause, all claims regarding demurrage and/or despatch shall be deemed to have been waived and shall be absolutely barred.

9.7.6 If the vessel is on demurrage then demurrage will continue to accrue (once on demurrage always on demurrage) except during the operation of any of the events, specified in Article 12 or during the period the vessel and/or its cargo gear/equipment breakdown or inefficiency or during the period of repairs or during the period of any other liability of the vessel due to the fault of the vessel owner.

9.8 LOADING PORT AND VESSEL WARRANTIES

9.8.1 Subject to Clause 11.2 below, the Seller guarantees that the Loading Port be 1 safe port/ 1 safe berth /1 safe anchorage, reachable on arrival and shall accommodate all of the physical characteristics of the carrying vessel including, but not limited to, the length, beam and draught of the carrying vessel provided that the vessel shall not load beyond the quantity range stipulated in Clause 5. Vessels will in principle be loaded and discharged on vessels arrival on a “first in first out” basis.

9.8.2 The Buyer undertakes that the vessel provided by the Buyer hereunder to load coal shall:

(a) be a single deck, self trimming bulk carriers;

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(b) for geared vessels all gears on board shall be and be maintained in good working order at all times during the loading of the coal and that such gears shall be available at all times for the Seller’s stevedores to operate free of charge to the Seller. The gear should not impede the normal operation of the ship-loaders or otherwise reduce the loading rate of the terminal;

(c) comply in all respects with the requirements and regulations of the port authorities and regulations of the terminal, including :

having a maximum length of 230 meters; having a maximum beam of 35 meters; and, draft of less than 13.5 meters of water have hatches of the mechanical type and shall be of such design and construction as to not

impeded the operation of the ship-loaders

(d) be in possession of a valid Safety Management Certificate and a valid copy of the relevant Document of Compliance issued in terms of the International Safety Management Code (“ISM Code”);

(e) carry an International Ship Security Certificate indicating that it complies with the requirements of the Safety of Life at Sea Convention (SOLAS) chapter XI-2 and part A of the International Ship and Port Facility Security Code (ISPS Code);

(f) provide on nomination any documentation or certification required for the trade and carriage of coal; and

(g) be classed Lloyds 100A1 or equivalent and fully covered by an Internationally recognised P&I Club of good standing.

(h) Ship (Vessel) Hold should be in clean condition and ready for loading. Any delay and cost associated with the cleaning operation of the vessel before loading are the Buyer’s responsibilities.

9.8.3. The Buyer shall notify the Seller of its appointed agent or representative of the Loading Port; and

9.9Overtime at Loading Port and related extra costs and expenses shall be for the account of the party who orders such overtime, if overtime is ordered by the port authorities or their representatives, then such overtime charges shall be for the Buyer’s account.9.10The Seller shall guarantee the following average uloading rate per weather working day of twenty four (24) consecutive hours, including Saturdays, Sundays and Holidays. Unloading rate shall be calculated pro rata for a period of less than twenty four (24) hours.

Vessel Size Average Loading Rate(MT) (MT) Over 60,000 up to 90,000 xx Over 100,000 xx

9.11 If warping or shifting alongside the wharf is necessary after the vessel has berthed thereafter, the time required therefore shall be counted as laytime used and all costs and expenses incurred therefore except for vessel's side shall be borne by Seller, unless such specific request is made by Master of the Vessel or Port Authority.

9.12 Seller shall bear the costs of loading of Coal on the vessel hereunder, wharfage, export tax and similar tax, impost or charge imposed by the government or other agency, and other similar costs which normally are considered to be for Seller's account except where those taxes, imposts or charges are specifically imposed on buyers. All costs of ocean transportation applicable to any cargo after delivery of such cargo aboard vessels at the Loading Port shall be for the account of and paid by Buyer. It shall be Buyer's responsibility to assure that vessels shall pay and bear all port charge,

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tonnage dues, light dues and other similar charges which are customarily payable on or with respect to the vessels at the Loading Port. If there is doubt as to the bearing of any costs or expenses relating to the delivery, the costs or expenses directly relating to the vessel shall be borne by Buyer and the others by Seller.

9.13 Bill of lading for Coal received on board vessel shall be issued on the basis of official weights at Loading Port determinedby the Agency using standard water displacement methods under Article 4.1.1.

ARTICLE 10 LIQUIDATED DAMAGES FOR QUANTITY SHORTAGE

10.1 If the quantity of Coal shown in the Bill of Lading (B/L) fails to meet the minimal quantity requirement of the shipment, in addition to other remedies available to Buyer, Buyer can claim and Seller shall pay liquidated damages for quantity shortage to Buyer as follows ;

The Contract Unit Price per tonne on FOB basis × (the Minimal Quantity less B/LQuantity) × 20% 10.2 The Buyer shall be entitled to deduct the amount of liquidated damages payable to it under this

Article from any amount payable by it to Seller under the Contract and/or to draw against the performance bond an amount not to exceed the amount of such liquidated damages.

10.3 Notwithstanding any other clauses herein express or implied to the contrary, Liquidated Damages shall not exceed 10% of the total contract amount.

ARTICLE 11 WARRANTIES WITH RESPECT TO COAL QUALITY

11.1 Seller shall supply the Coal of quality in accordance with the provisions of the Contract and warrants that :(a) Each shipment of Coal shall be of good grade meeting the requirements referenced in Article 3

(Quality) not sticky during its unloading and substantially free of impurities such as wood, iron, nonferrous materials, blast materials or other foreign materials, whether emanating from mining operations, storage, handling, loading or otherwise;

(b) No shipment of Coal shall contain petroleum coke, pitch, pitch coke, tar sludge or other by-product-related solids (collectively "Organic Contaminant(s)") as determined by the Testing Laboratory in accordance with Article 5 (Determination of Quantity and Quality);

(c) No Organic Contaminant(s) or any other non-coal material other than water added for purposes of dust suppression has been intentionally added to any shipment of Coal;

(d) No salt has been added to any shipment of Coal, whether for freeze-proofing, dust-proofing or elimination of possibilities of spontaneous combustion, or otherwise and no part of that shipment of Coal has been in contact with sea or salt water prior to completion of loading at the loading port ;

(e) Coal loaded in all layers of the vessel vertically and all hatches of the vessel horizontally shall be of the uniform quality in all items specified in Article 3 of this Contract. If otherwise, Buyer may reject the Coal loaded at the relevant vessel without any liability thereof.

11.2 The liability of a Party in respect to any claim brought by the other Party based on a failure of the first Party to fulfill its obligations hereunder shall be limited in any event to liability for the direct loss suffered by the Party aggrieved but not consequential damages therefore.

11.3 At Buyer's option, Buyer may appoint an independent survey company (“Surveyor”) to survey the Coal for any foreign materials at the port of discharging. All expenses relating to such survey shall be for the account of and paid for by the Seller if such survey discloses foreign materials in the Coal.

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Otherwise, Buyer shall pay. The determination of the independent survey company so appointed shall be final, conclusive and binding on both Parties.

11.4 If the Surveyor determines that Organic Contaminants are present in a shipment of Coal, then Seller shall pay Buyer an amount below:

5% of Initial Commercial Invoice price amount which Seller supposed to send to Buyer

11.5 Notwithstanding any other provision express or implied to the contrary and without prejudice to the Buyer’s right herein, Buyer may reject any shipment of coal which (i) contains Organic Containments such as iron scrap, wood and so onenough to and/or(ii) deems to be too sticky to unload when Buyer reasonably determines that use of and/or unloading of such sticky Coal may be detrimental to Buyer’s facilities or may adversely affect the operation of Buyer’s generating units. In this event, Buyer shall arrange and notify to Seller photographs of such Organic Containments and/or sticky coal.

ARTICLE 12 PERFORMANCE BOND

12.1 Seller shall establish a performance bond in favor of Buyer within seven (7) days from receipt of the Price Term Notice from Buyer after an agreement on the contract price and shipping schedule adjustments in an amount not less than ten percent (10%) of sum amount of each shipment price. The performance bond should be in the form of irrevocable clean letter of credit or the Guarantee Certificate issued by Guarantee Insurance Company or bank guarantee with confirmation of Korea Exchange Bank, Seoul, acceptable to Buyer (form : attached). The performance bond shall be issued by a first class international bank with the condition that Korean Bank in Korea reissue Bank Guarantee in case of irrevocable clean letter of credit and bank guarantee.

12.2 The performance bond shall be valid from the date of its establishment until three (3) months after the date of Bill of Lading of each shipment as specified in the Contract. If Buyer has any claim against Seller which is not settled within the validity of the performance bond, Seller shall cause the issuing bank of that clean letter of credit to confirm to Buyer, not later than five (5) days before the date of expiry of that letter of credit, of the extension of the validity of that letter of credit for such period of time as required by the Buyer. If Seller's clean letter of credit is not so extended, Buyer may draw the full amount of that said such letter of credit.

12.3 In the event of Seller's default in performing its obligations under this Contract, Buyer may draw such amount under the performance bond if Buyer judges that it is necessary to be compensated by Seller for its losses, damages, expenses, or other costs (or any part thereof) arising from or related to Seller's default.

12.4 Buyer will release each performance bond, without interest, after the expiration of the validity of the performance bond or after the Buyer has completed discharging of each shipment of Coal at the port of discharging, provided that Buyer confirms that each shipment of Coal is in accordance with all the requirements of this Contract.

12.5 If Seller fails to establish the performance bond required hereunder to be deposited within the required period specified above, Buyer shall have the right to cancel this Contract.

“Sample of P-Bond” Please advise the following performance bond with confirmation of Korea Exchange Bank KEPCO Branch in Seoul.

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Quote Issuing Date: To: Korea Midland Power Co., Ltd. We hereby issue our irrevocable letter of guarantee No...... in your favor for account of contractor up to an aggregate amount of US$........ (Say US Dollars...........only) as a performance bond in accordance with the terms and conditions of the tender for the (Contract No.) This guarantee shall be available upon receipt of your first demand either by your Bank's authenticated swift message accompanied by your declaration stating that the amount claimed is due by reason of the contractor having failed to perform the work. This guarantee will expire on (expiry date) and any claims must be received by us in writing on or before (expiry date plus 20 days mailing period), after which date this guarantee will become null and void whatsoever whether the letter of guarantee is returned to us or not. Unquote This message is the operative instrument.

Seller who has track record of Coal supply to Buyer shall be exempted from establishing a Performance Bond.

ARTICLE 13 FORCE MAJEURE

13.1 Events of Force Majeure. An “Event of Force Majeure” shall mean any circumstance not within the reasonable control, directly or indirectly, of the Party affected, but only if and to the extent that (i) such circumstance, despite the exercise of reasonable diligence, cannot be or be caused to be prevented, avoided or removed by such Party, (ii) in the case of claims by Seller, such event materially adversely affects (in cost and/or time) the ability of Seller to perform its obligations under this Agreement, and Seller has taken all reasonable precautions, due care and reasonable alternative measures in order to avoid the effect of such event on Seller’s ability to perform its obligations under this Agreement and to mitigate the consequences thereof, (iii) such event is not the direct or indirect result of the failure of such Party to perform any of its obligations under the Contract, and (iv) such Party has given the other Party prompt notice describing such event the effect thereof and the actions being taken in order to comply with this Clause 13.1.

13.2 Instances of Force Majeure. Events of Force Majeure shall include, but not be limited to:

(a) acts of war or the public enemy whether war be declared or not;(b) public disorders, insurrection, rebellion, sabotage, riots or violent demonstrations;(c) explosions, fires, earthquakes, floods, or other natural calamities and acts of God; (d) strikes or other industrial action by workers or employees;(e) acts of the Government in either its sovereign power or governmental restrictions or control on

imports, exports or foreign exchange

13.3 In the event that any conditions of force majeure occur or are likely to occur, the Party directly affected shall promptly notify the other Party by telex, facsimile or cable to be followed by a written notice setting forth the particulars of the relevant event with supporting evidence. The party so affected shall take all reasonable steps to remove the conditions of Force Majeure, with the least possible delay, in compliance with its obligations under this Contract. If no consultation is made within 7 working days or no agreement is reached between the Parties within 21 days of such request being made, then the performance of this Contract by the Party giving the notice shall be

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suspended for the duration of and insofar as the same affected by disability resulting from such Force Majeure and the Party giving aforementioned notice shall not be liable for delay or failure in performance of the relevant provisions of this Contract for such duration. If any contingency persists as a period of 90 (ninety) days or more, either Party may cancel any orders affected by such delay without any liability to the other Party.

ARTICLE 14 TERMINATION

14.1 In the event that Seller commits material breach of obligations under this Contract, then Buyer may at its sole discretion by giving 7 (seven) days prior written notice to Seller, terminate this Contract without any liability or charge to Buyer. In the event that conditions of Force Majeure called by Seller continue, Seller’s obligations remain suspended for a period or periods amounting in aggregate to 90 (ninety) days in any consecutive period of 180 (one hundred and eighty) days, and at the end of said period or at any time thereafter, Buyer concludes that there is no likelihood or ending such conditions in the immediate future, then Buyer may terminate this Contract without any liability or charge to Buyer by giving 7 (seven) days prior written notice to Seller.

14.2Termination of this Contract shall be without prejudice to the accrued rights and obligations of the Parties hereunder.

ARTICLE 15 TRANSFER OF TITLE AND RISK

15.1 The loaded Coal upon completion of loading and trimming work evidenced by issuing a Bill of Lading by the vesselmaster shall be deemed to have been sold and delivered to Buyer. Title and risk of losses or damages thereto shall pass to Buyer as the Coal passes the vessel's rails at the loadingport.

15.2 In the event that a shipment of coal is rejected in accordance with Article 5, the title of that Coal and the risk of losses or damages thereto shall pass back to Seller uponBuyer's written notice to Seller.

ARTICLE 16 DISPUTE AND ARBITRATION

All disputes, controversies, discrepancies or differences which may arise between the Parties, out of, or in relation to or in connection with this Contract, or for the breach thereof shall be finally settled by arbitration in Seoul, Korea in accordance with The Commercial Arbitration Rules of The Korean Commercial Arbitration Board and under the laws of Korea. The award rendered by the arbitrator(s) shall be final and binding upon both Parties concerned.

ARTICLE 17 GOVERNING LAW

This Contract shall be governed, construed and interpreted in accordance with the laws of the Republic of Korea.

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ARTICLE 18 ASSIGNMENT

18.1 Neither party shall assign this Contract in whole or in part except in case of merger and acquisition, takeover or equivalent action whatsoever. Neither party may assign any moneys due or to become due hereunder to a third party. This Contract shall be binding upon and shall inure to the benefit of the legal representatives and successors of the Parties hereto. Any purported assignment by either Party shall be void and of no effect.

18.2 Any assignment pursuant to the results of merger & acquisition, takeover or equivalent action shall not take effect until the assignee has executed in favor of the other Party hereto a deed of covenant in a form approved by such other Party to comply with, observe and perform the provisions of this Contract in regards to the subject of this Contract.

ARTICLE 19 EFFECTIVE DATE

This Contract shall be effective and executed as from the date the authorized representatives of both Parties have signed.

ARTICLE 20 WAIVERS

The failure of either Party to enforce at any time any of the provisions of this Contract, or to require at any time performance by the other Party of any of the provisions hereof, shall in no way be construed to be a waiver of such provision, nor in any way to affect the validity of this Contract or any part hereof or the right of either Party thereafter to enforce each and every provision. Notwithstanding the above, the Parties may modify or amend any provisions of the Contract if agreed in writing and signed by both Parties.

ARTICLE 21 NOTICESAll notices, requests, demands, and other communications hereunder shall be in writing and shall be deemed to have been duly given upon delivery to the Party to be notified if delivered by personnel or registered air mail at the date of dispatch for notices by telex, facsimile, cable or radio unless otherwise expressly provided for in this Contract. If the notice is to the Buyer, to: Fuel & Resource Team / Procurement Department Korea Midland Power Co., Ltd. Attention: Min Soo Kim / General Manager Address: 38, Teheran-ro 114-gil, Gangnam-gu, Seoul 135-280, Republic of KoreaFacsimile No.: 82-2-2186-1054 E-mail: [email protected] or [email protected]

If the notice is to Seller, to: Attention:

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mailto:[email protected]


Address: Facsimile No.: E-mail:

The address or facsimile number may be changed from time to time, such changes are to be notified in writing.

ARTICLE 22 ENTIRE AGREEMENT

This Contract constitutes the entire agreement and understanding between the Parties as to the subject matter of this Contract and merges, supersedes all prior agreements, commitments, representations, writings and discussions between them. Neither of the Parties shall be bound by any other prior obligations, conditions, warranties or representations with respect to the subject matter of this Contract.

IN WITNESS WHEREOF, the Parties hereto have caused this CONTRACT to be duly executed by their respective authorized representative as of the date first above written.

SELLER

By: Name:Title:

BUYERKorea Midland Power Company Limited

By: Name : Seong-ik JangTitle: Vice President

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