EXHIBIT 10.82
Coal Supply Agreement
This Agreement is made on February 3, 1996 between Kailuan
Coal Mining Administration ("Seller"), and Tangshan Panda Heat
and Power Co., Ltd. ("Panda") and Tangshan Pan-Western Heat and
Power Co., Ltd. ("Pan-Western" and jointly with Panda, "Buyer").
Either Buyer or Seller is a "Party" and together they are
"Parties to this Agreement.
Buyer intends to build, own and operate coal fired electric
generating facilities (collectively, the "Facilities") in Luannan
County near Tangshan City, Hebei Province.
Now therefore, the Parties agree as follows:
1.1 Purchase and Sale of Coal: Seller shall sell to Buyer a
portion of Buyer's coal requirements (as determined by Buyer) and
Buyer shall have the right to purchase up to 300,000 tonnes of
coal per year subject to the terms and conditions included
hereunder.
1.2 Seller's Coal Reserves: Seller represents that sufficient
coal reserves and production capability exist in the Kailuan Coal
Mining Administration to meet the portion of Buyer's coal
requirements covered by this Agreement. Buyer and Seller agree
that the primary mine to supply the coal covered by this
Agreement is the Qianjiaying Mine. If the geologic conditions or
mine plans for the Qianjiaying Mine change materially, Seller
will notify Buyer of such change at least three months before
such changes take effect.
1.3 Shipments: Prior to each Agreement year, Buyer shall
provide Seller an estimate of its coal requirements in
approximate equal monthly amounts. If Buyer's planned schedule
changes, Buyer may require Seller to change previously requested
amounts upon at least thirty (30) days prior notice. In
emergency situations, either Party may require the other Party to
change previously determined amounts upon at least 15 days prior
notice.
1.4 Term and Annual Redetermination: In the November prior to
the expected start-up of Buyer's Facilities, Buyer and Seller
shall meet to mutually determine the market price and shipping
schedule etc., and sign a coal supply contract for the following
year. Annually during November, thereafter, the Parties shall
meet to redetermine the market price, shipping schedule, etc. and
sign a coal supply contract for the following year. Effective
with the date of first purchase of coal by Buyer from Seller,
this Agreement shall continue for a term of ten years.
2.1 Coal Quality Specifications: Seller agrees to use its best
efforts to keep coal shipped to Buyer reasonably free of rock,
wood and other foreign substances. Seller agrees to sell blended
run of mine coal to Buyer which shall meet the following quality
specifications with total moisture:
Coal Contents: Average Quality: Acceptable Limits
Total Moisture % 7.5 9.0 (Maximum)
Ash % 33.0 37.0 (Maximum)
Sulfur % 1.25 1.35(Maximum)
Heat Value-Kilocalories 4,000 4,300 (Minimum)
per kilogram (Kcal/Kg)
Top Size Coal 0.0 5.0 (Maximum)
(% > 100 mm)
Fines-(% < 6 mm) 65 75 (Maximum)
Coal complying with the Acceptable Limits above will be accepted
by Buyer.
2.2 Governing Analysis: Buyer and Seller shall analyze coal
from samples collected by Seller at Seller's mine facilities.
Seller shall split such sample into three parts - one part for
Seller's analysis, one part for Buyer's analysis, and one part
for record. Such Analysis shall be performed according to
national sampling and testing standards to determine compliance
with Buyer's Coal Quality Specifications. Seller's analysis
shall govern unless Buyer's and Seller's analysis differ
significantly. Upon a dispute, the Parties shall discuss the
differences and if necessary have a third analysis on the record
sample split performed by an independent coal research facility
which analysis shall be binding on both Parties.
2.3 Buyer's Right to Reject Coal: Buyer shall have the right to
reject coal if any daily shipment does not meet the above
Acceptable Limits. Prior to any such rejection Buyer shall
notify Seller immediately of the problem and the Parties shall
discuss such rejection or acceptance of coal. If the coal
quality continues from all of Seller's shipments to be below
Acceptable Limits for two consecutive days, Buyer shall have the
right to suspend deliveries for all or any portion of coal upon
notice to Seller (until Buyer is satisfied that the cause of such
rejection has been cured).
3.1 Governing Weight: Buyer and Seller agree that the weight of
the coal sold and purchased shall be determined by certified
scales maintained by Seller at its mine. Seller agrees to allow
buyer the right to witness Seller's weighing operations and to
have an independent authority test the accuracy of Seller's
scales if, in good faith, Buyer has reason to question the
accuracy of Seller's scales. Weights shall be adjusted according
to the findings of the independent authority.
4.1 Market Price: The price of coal (which shall be
redetermined as of December 1 of each year) shall be the average
annual price in RMB Yuan per Kilocalorie ("Market Price") for
coal sold by Seller for the following year under similar terms
and conditions.
5.1 Payments: Excluding any amounts in good faith dispute,
amounts due Seller by Buyer, including adjustments, shall be paid
Seller within 5 to 15 days after the end of the month.
6.1 Law: This Agreement and the rights and obligations
hereunder shall be interpreted, construed and governed by the
laws of the Peoples Republic of China.
7.1 Termination: This Agreement may be terminated by either
Party by notice to the other Party if the other Party materially
breaches its obligations and such breach is not cured within
sixty (60) days after receipt of notice of such breach.
7.2 Lender Approval: If by December 31, 1996, Buyer is unable
to obtain its lenders approval of this Agreement (unless Buyer
waives such requirement), this Agreement may be terminated by
either Party upon written notice to the other Party.
7.3 Policy Change: If the National Energy Policy of the Peoples
Republic of china changes such that the rules governing the
allocation of coal would restrict Seller's ability to make all
such sales under similar terms and conditions, Seller shall have
the right to terminate this Agreement upon six months prior
written notice to Buyer.
8.1 Force Majeure: If either Party should experience
circumstances beyond its control, which prevents that Party from
performing its obligations under this Agreement, such Party will
be relieved from such obligations as long as the force majeure
condition exists. If the force majeure condition persists for 90
days, the other Party may terminate this Agreement upon written
notice to the Party declaring force majeure. Any Party declaring
force majeure shall use reasonable efforts to mitigate the effect
of such force majeure and to restore its performance.
9.1 Notices, Communications: Notices or other communications to
be given to a Party shall be in writing and sufficient if
delivered personally or sent by registered mail or facsimile, to
the addresses set forth below. Any Party may, by notice to the
other, change its addresses and/or facsimile numbers for notices
and communications.
IN WITNESS WHEREOF, the Parties, intending to be legally bound,
have caused this Agreement to be signed and sealed by their
respective officers thereunto duly authorized as of the day and
year set forth above.
For and on behalf of For and on behalf of
Kailuan Coal Mining Administration Tangshan Panda Heat and
Power Co. Ltd.
By: __________________________ By: ____________________
Name: Name:
Title: Title:
Notice Address: Notice Address:
Facsimile No.: Facsimile No.:
Telephone No.: Telephone No.:
Tangshan Panda Heat and
Power Co. Ltd.
By: ____________________
Name:
Title:
Notice Address:
Facsimile No.:
Telephone No.:
