1961

              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.