of fact, the iron ore market's progressive switch to pellets has become so general and so swift that strong pressure is already felt for an expansion of Marcona's facilities to meet the demand, and plans are in motion for the installation of an additional two million tons of pellet capacity. Since the profit margin on pellets is more attractive than the products produced from the ore it displaces, the consummation of an expansion in Marcona's pellet production should benefit its earnings in future years. Discussion of Marcona necessarily involves consideration of Cia San Juan, S. A., an affiliate also owned 42-1/4% by Utah and engaged chiefly in the marketing and ocean transportation of Marcona ores. San Juan Carriers, Ltd., a wholly owned subsidiary of Cia San Juan, owns and operates 7 ships having a total capacity of 375,000 deadweight tons which transport Marcona ores to markets throughout the world. Three of these vessels, of about 71, 000 deadweight tons each, are the largest dry cargo vessels ever constructed. A new vessel of 60, 000 deadweight tons, authorized this year for delivery in early 1966, will increase the San Juan fleet to 8 vessels having an aggregate of 435, 000 deadweight tons. Supplementing the existing fleet, in 1963 San Juan chartered an additional 124 vessels, some of them on a time charter basis. Most of the San Juan vessels are designed as ore-oil carriers. In the course of their movement of Marcona ore some of them operate on return voyages with backhaul cargoes of crude oil. This pattern of operations has -8-