Hi Janis,
After some quick searching I found out that this setting only appears after a Smart/magnetic cover is attached for the first time.
There may be a problem with the way the magnets in your case line up with those in the iPad mini causing the setting not to be triggered. I would suggest slowly dragging the cover around the border of the screen to try and find the "sweet spot" on the case.
If this doesn't work it may just be that the case does not have appropriate magnets to trigger this feature.
Although they are higher priced, it's hard to beat the official Smart Covers, but this may not be a suitable solution for you though. You may be able to take your iPad with you to an Apple Store / other electronics retailer and find a suitable case which works with this feature.
Hopefully you can get it working without too much hassle.
Cheers,
Mitchandmacs