japanese buyers a japanese seamen's union strike at midyear further aggravated the low ore delivery rates to steel mills from all ore suppliers since long-term iron ore sales contracts do not generally provide for cost escalation mount goldsworthy and similar projects which are developed to satisfy long-term delivery commitments are undertaken with full recognition that profitability in later years of the contract may be reduced by the effects of inflation currency revaluation and increased mining costs as the pits are advanced in the past to forestall the effect of these factors mount goldsworthy has increased its long-term sales commitments to provide an expanded level of operations such an expansion is now underway to develop the nearby sunrise hill and shay gap deposits the additional facilities will include a new mine and township at shay gap and 44 miles of railroad spur line from the present operating site completion is expected in april 1973 at which time the base annual production capacity of these mines will total eight million tons with some continued weakness in iron ore markets it is expected that contracted sales may not require full production at this increased capacity before 1974 insufficient demand from japanese and other steel producers has resulted in surplus iron ore production capacity in australia and elsewhere when the growth of worldwide steel production causes iron ore requirements to exceed existing supply capabilities new mines will be developed utah has interests in two western australia properties with potential for such development the first and most advanced is designated as mining area c in which utah development company has a one-third interest in reserves containing an estimated 500 million tons of high grade ore another is known as mccamey's monster where utah development's interest is about 11 and drilling results indicate substantial tonnages of good ore either project will require sizable capital for development and therefore each must be a large-scale operation with correspondingly large ore sales contracts utah international and cyprus mines corporation each own 46 of the equity interest and 50 of the voting stock of marcona corporation whose assets include iron ore mines and extensive ore handling and beneficiation facilities in peru operations began there in 1 953 on a relatively small scale subsequently through a series of expansion programs the marcona complex has developed into a sophisticated operation capable of producing up to ten and one-half million tons of iron ore products annually the most recent expansion at marcona which was completed this year raised pellet capacity by 700,000 tons to four million tons per year and enlarged marcona's capacity to produce other beneficiated iron ore products as well shipments of 9,114,000 tons from peru were up slightly from last year despite weaker iron ore markets and the japanese seamen's union strike consequently higher prices an improved product mix and relative labor stability combined with increased deliveries to better the performance of the previous year on october 31 1972 marcona held contracts requiring future deliveries of 44 million tons of iron ore products from the peruvian operations buoyed by the belief that air pollution requirements of major steel producing countries will result in a shift toward better quality iron ore products marcona has been considering a further increase in its pelletizing capacity during the past year discussions have been held with peruvian authorities and japanese equipment suppliers to consider a program to nearly double marcona's present annual pellet production underthese arrangements financ ing would be provided by the buyers and equipment suppliers and some equity ownership of the mining operations by the peruvian government is probable an adverse decision in may by the peruvian supreme court in a case involving depletion deductions claimed by marcona is involved in the negotiations and the applicability of existing tax indemnity provisions must also be resolved in 1 970 marcona initiated the waipipi project to produce up to two million tons of iron concentrates annually from vast iron sands deposits on the west coast of new zealand at this project 75 of which is held by marcona hydraulic dredging and magnetic and gravity separation units are used to 14 as traditional mineral supplies are depleted the search for new resources must center increasingly on locations which are more distant from the industrial areas of the world to bridge the widening gap between points of supply and existing processing facilities fleets of special ized ships and innovative handling techniques mini mize the cost impact of these greater transportation requirements marcona's 130,000 deadweight ton san juan for delivery to the far east dual-product shipping capabilities enable this vessel to sgbk an oil cargo lor its backhaul voyago