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Show 3. Today Utah Construction & Mining Co. derives over 90% of its gross profit from its mining and ocean shipping activities. As mining companies go, it is relatively well diversified among the various minerals. We derive substantial earnings from the production of coal, iron ore, uranium, and copper and in approximately that order of importance. The mining properties in which we have an interest are in the Western United States, Australia and Peru and new properties are being brought into production in Canada and in New Zealand. There are four corporate entities that are significant in our picture. The parent company operates the Iron Springs mine in Utah, the production of which is sold under long term contract largely to United States Steel; the Navajo Mine in New Mexico, whose output of steam coal is sold under long term contracts to a complex of utility companies for the generation of electricity; the Lucky Mc mine in the Gas Hills in Wyoming, producing and milling uranium; the Shirley Basin uranium mine and mill in Wyoming which will soon become operational; and the Island Copper mine and mill on Vancouver Island in British Columbia, which is expected to be in operation early next year. Utah Development Company, 90% owned, holds our Australian interests including a 1/3 interest in the Mount Goldsworthy iron ore venture in Western Australia, our Blackwater coking coal mine in Queensland, and an 85% interest in two new coking coal mines being brought into production - Goonyella, which is expected to start shipping this year and Peak Downs, which is expected to come on stream a year later. Two affiliated companies are important: The Marcona Corporation, in which we own a 46% interest, which through subsidiaries operates an iron ore mine in Peru, a fleet of ocean bulk carriers owned or under charter, and is bringing into production this year an iron sands operation in New Zealand in which it will have a 75% interest. We also hold a 25% interest in the Pima Mining Company, which produces copper concentrates in Arizona. We are pleased to be associated in three of these ventures with two Los Angeles -based companies. Cyprus Mines holds a like interest in Marcona and Golds-worthy and a 50% interest in Pima which it operates - and I hasten to add -operates very well. Union Oil also holds a 25% interest in Pima. In 1970 we were able to report record earnings for the sixth consecutive year and I see no reason why this trend should be disturbed in 1971 or for the next several years ahead. At year end our backlog of undelivered mineral sales stood at approximately $2.45 billion, 26 times the level of ten years ago. This backlog consists of long term contracts covering forward deliveries of iron ore, uranium, steam coal, coking coal, and copper. It does not include the backlog of affiliates. 77% of the dollar value of the backlog is represented by contracts which include escalation clauses protecting the company against future cost increases. The backlog provides us with guaranteed sales and with a substantial measure of protection on profit margins. |