that now prevails in copper markets. While the United States quoted price is 34, the world price has ranged considerably ahead of this and copper futures on the London exchange are still quoted at 51 for 90-day delivery. A portion of Pima's production from its mine near Tucson has been sold at levels above the United States quoted producer's price, and this has and will help 1965 earnings. However, I view this more as a temporary windfall than a permanent situation, for the major producers of copper wisely are trying to keep the price down to avoid inroads by competing metals into the traditional markets for copper. With labor peace and higher production rates the acute present shortage situation should be eased and the disparity between the United States price and the world price should gradually disappear. Coal Utah's coal production from its Navajo mine in New Mexico recorded improved profits in the first half of the year because of greater volume. Last year we were serving generating capacity of 350,000 KW, but the third unit went into service in June 1964 and therefore our operations this year have been providing coal for 575,000 KW of capacity. Arizona Public Service has an option to require us to supply fuel for an additional 225,000 KW plant but is currently working with Southern California Edison and other members of WEST Associates in a coordinated program to meet the energy needs of these 15 companies, and I shall speak about this at greater length later. These are the influences that are causing our mining income in the first half of our fiscal year to compare favorably with the results in the comparable period last year. Mining Expansion Program Looking ahead in our mining picture, I would like to divide my remarks into three categories: first, 6 planned expansion that is actually under way; second, expansion from proven deposits where negotiations with potential buyers are in progress but no firm agreement has yet been reached; and lastly, a brief comment on other latent mineral assets or mineral programs that may provide sources of expansion in the more distant future. Current Expansion We have three expansion programs in which participation has already been approved by our Board of Directors and the work is under way. Two of these concern existing mines and the third is a new mine. Marcona The Marcona Mining Company is modifying its existing pellet plant to increase the capacity from 1 million tons to 1.3 million tons, and this should be completed in August of this year. In addition, the company plans to add a new pelletizing unit having annual capacity of 2 million tons and hopes to complete this by the end of summer in 1966. This program will cost $23,600,000 and should increase Marcona's profitability by improving its product mix, for pellets carry a higher profit margin than the other beneficiated iron ore products produced from the Marcona facilities. This program is being financed by an Export-Import Bank loan and through retention of earnings. Our willingness to go forward with it was predicated upon reaching a revised agreement with the Santa Corporation, the agency of the Peruvian government from which we obtained our concession. This revision would amend our concession agreement in ways that would be satisfactory to both parties and would recognize the changes that have taken place since the agreement was originally negotiated 14 years ago. Virtual agreement on the points in question has been reached and, without going into details, the agreement provides for higher royalties to Santa, greater flexibility to Marcona 7