OCR

1961 Mining activities continued to contribute the major portion of earnings to Utah, although the results were below those of 1960 because of a decrease in uranium profits. Improved results from construction and land development activities and price adjustments for prior years' con- struction work and dredging operations more than offset the decrease in earnings from mining operations. Profits from iron ore were the leading source of consolidated earnings and showed little change from the previous year. Domestic iron ore earnings were slightly below 1960, while the earnings from overseas iron ore increased. However, earnings from uranium mining and milling declined from the preceding year. Excellent progress was made in reducing operating costs for the mining and milling of the uranium ores owned or controlled by the company. A substantial part of the difference in uranium earnings was caused by the additional cost to purchase and process ores produced by others as required in our contract with the Atomic Energy Commission. The purchase of outside ores had been an obligation under our A.E.C. contract from its inception, but during 1960 we were allowed to substitute our own lower cost ores to supply the deficiency caused when offerings from outside mines were below the scheduled amount. Development of a 25, 000 acre strip coal mine on the Navajo Indian Reservation was on schedule, and deliveries of coal to the first 350,000 kw installation for Arizona Public Service Company was expected to begin in 1962. Utah signed a 35-year contract to provide fuel requirements for this facility. Expansion programs were under way by the company's two mining affiliates: Marcona and Pima. At Marcona the $22, 000, 000 program, begun in 1960, was expanded to $42, 000, 000. At Pima a $4, 000, 000 program was under way to process low grade reserves and extend the life of the mine. Earnings from ore sales and ocean shipping were lower despite the higher tonnages of iron we sold and shipped. Continued downward pressure on ocean charter rates narrowed profit margins. However, the long-term outlook remained favorable, and San Juan Carriers, Ltd. , our shipping- affiliate, started construction of two 67,500 ton ore-oil carriers and had contracted for a third. Gross profits from our construction activities were the highest in the company's history. This record was made possible by price adjustments carried over from prior years' construction work, coupled with satisfactory earnings from current operations, which were conducted at the second highest rate that we had ever enjoyed. Iron Ore Utah mines its domestic iron ore at the Iron Springs mine near Cedar City, Utah, the output of which is contracted for by the Columbia- Geneva Division of United States Steel Corporation. During 1961, Utah built and brought into operation an iron ore beneficiation plant at the Iron Springs mine. This plant permitted better utilization of the ore reserves. Land Development Utah's principal land development activities are based upon the philosophy of creating higher value from strategically located but currently unused land. Using its substantial earth-moving facilities and experience to improve these lands by clearing, grading and sometimes filling, the company has sought to benefit from the increased value which has resulted.