good start has been made at the El Segundo Industrial Park. To us real estate investments are inventory and work-in-process. They must be acquired with care, developed with skill, and sold to the best advantage that the market will permit. It costs money to carry real estate and ready it for sale and the time lag between acquisition and sale makes it the more imperative that the future be forecast with accuracy. Our approach has been considerably more cautious than that of many other operators, and we have not bought property on speculation in the hope of a quick turn nor in the hope that by holding it undeveloped for many years the change in value would more than cover the carrying costs. We have looked to the performance of a service as the principal source of our profits, although we have benefited by the upward trend of prices that has taken place. In our opinion the land that we have acquired is good inventory strategically located in the path of population growth and industrial expansion. The cost on our books is well below existing market values. MINING In our mining activities I have already touched on some of the truly significant developments that have put these operations on a sounder footing and placed them in a position to provide a greater flow of future earnings, although in some cases the annual flow will be reduced. To maximize the profit potential, we have made additional investments in beneficiating facilities at Utah's Iron Springs mine, at Marcona's iron ore operations in Peru, and at Pima's copper property in Arizona. Each has had the 10 effect of enlarging the reserves that can be mined, increasing the total profits that can be earned, and extending the potential life of these particular mines. Also at Marcona and at Pima we have expanded their capacity to mine and to process ores, making possible greater annual volume. IRON ORE The new agreement with Columbia-Geneva would not have been possible without the investment in beneficiation facilities. Because the new agreement adds concentrates to the products sold and because Utah agrees to a flexible delivery schedule when steel operations are below normal, annual profits will be somewhat lower. However, the increase in total tonnage sold gives Utah much greater profits than were possible under the old agreement. Utah's Iron Springs mine is tied directly to Columbia-Geneva and its rate of operation will be determined by that company's market for steel in the fast-growing Far West. Marcona, on the other hand, is subject to the factors that influence the worldwide supply-demand ratio for iron ore, for it competes successfully in all the major steel producing centers of the world. In the past several years there has been a slackening of demand unfortunately timed with the arrival in the market of new sources of supply. Marcona has been able to sell all that it could produce but there has been pressure on margins. However, there are indications of an upswing in demand and the long-range forecasts call for a substantial growth in the demand for imported oresthe 1970 level being twice that of 1962. Marcona is in an excellent position to obtain its share of this expanding market because 11