AMENDMENT NUMBER EIGHT TO COAL SALES AGREEMENT
                 ----------------------------------------------


This Amendment Number Eight to Coal Sales Agreement  ("this  Amendment") is made
effective as of the 1st day of September,  1995 between SAN JUAN COAL COMPANY, a
Delaware  corporation  ("SJCC"),  PUBLIC  SERVICE  COMPANY OF NEW MEXICO,  a New
Mexico  corporation  and TUCSON ELECTRIC POWER COMPANY,  an Arizona  corporation
(collectively, "Utilities").


                                    RECITALS:


1.       SJCC and  Utilities  are parties to that certain  Coal Sales  Agreement
         dated August 18, 1980,  as amended and  supplemented  (the "CSA") which
         provides  for the delivery of coal to the San Juan  Generating  Station
         ("SJGS").

2.       The CSA  describes  specific  coal  sources  for  SJGS,  including  the
         Fruitland  Leases  and the La  Plata  Leases.  Under  the  terms of the
         various subleases and assignment agreements that give SJCC the right to
         mine coal from the Fruitland and La Plata Leases, SJCC and BHP Minerals
         International   Inc.  ("BHP")  are  obligated  to  make  the  following
         payments, among others, to third parties:

         a)       A Retained Economic Interest ("REI") is payable by BHP on each
                  ton of coal mined and delivered  from the Fruitland  Leases or
                  on an  Annual  Tonnage  (the "REI  Minimum"),  as set forth in
                  Article VI of the Sublease  between  Western Coal Co.  ("WCC")
                  and BHP (formerly  Utah  International  Inc.) dated August 18,
                  1980, as amended (the "BHP  Sublease"),  whichever is greater.
                  An amount  equal to the REI is  payable by SJCC to BHP on each
                  ton of coal  mined and  delivered  from the  Fruitland  Leases
                  under the  provisions  of the  Sublease  between  SJCC and BHP
                  dated August 18, 1980, as amended (the "SJCC Sublease").

         b)       An   Overriding    Royalty   and/or   Net   Profits   Interest
                  (collectively,  "NPI") is  payable by SJCC on each ton of coal
                  mined and  delivered  from the La Plata Leases or on a minimum
                  annual tonnage (the "NPI Minimum"),  whichever is greater, all
                  as set  forth  in the  Assignment  Agreement  between  WCC and
                  Cimarron  Coal Company dated October 30, 1979, as amended (the
                  "Assignment  Agreement").  The rights and  obligations  of WCC
                  under the Assignment Agreement were assigned to and assumed by
                  SJCC by Assignment of Leases dated November 24, 1981.

         c)       Under  the  terms of the  CSA,  Utilities  reimburse  SJCC for
                  amounts  equal to payments of REI made by SJCC pursuant to the
                  SJCC Sublease and for payments of NPI made by SJCC pursuant to
                  the Assignment Agreement.

3.       The parties wish to provide  flexibility  among coal sources,  with the
         objective  of lowering  the total  delivered  cost of coal to SJCS,  by
         providing  for payment by Utilities to SJCC of amounts  equal to REI or
         NPI payments made by BHP or SJCC, respectively, with respect to the REI
         Minimum or the NPI Minimum to the extent that lower cost coal  replaces
         coal  which  would  otherwise  have been mined and  delivered  from the
         Fruitland Leases and/or the La Plata Leases.


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                               CSA Amendment Eight


Now therefore,  in consideration of the promises contained herein and other good
and  valuable  consideration,  the receipt and  sufficiency  of which are hereby
acknowledged, SJCC and Utilities hereby amend the CSA as follows:


                                  DEFINITIONS:


(A)      La Plata  Minimum is the "La Plata  Surface Mine La Plata Leases Annual
         Tons" as set forth in Column 4 of Exhibit H of the CSA.

(B)      Fruitland  Tons is the actual number of tons mined and  delivered  from
         the Fruitland Leases during the year.

(C)      Fruitland Substitute Tons are any Replacement Tons delivered to SJGS by
         SJCC, provided,  however,  that the number of Fruitland Substitute Tons
         is any year will not exceed the greater of (i) the REI Minimum plus the
         ending REI  Shortfall  Balance  for the  previous  year (as  defined in
         paragraph (E) below) less the Fruitland Tons, or (ii) zero (0).

(D)      REI  Shortfall  Tons means for any year the REI  Minimum  for that year
         less the sum of Fruitland  Tons and Fruitland  Substitute  Tons for the
         year. (REI Shortfall Tons may be negative.)

(E)      REI  Shortfall  Balance  for 1994 year end is  377,828.  The ending REI
         Shortfall  Balance for each year  thereafter will be greater of (i) the
         sum of the ending REI  Shortfall  Balance for the previous year and the
         REI Shortfall Tons for the year, or (ii) zero (0).

(F)      La Plata Tons is the actual number of tons mined and delivered from the
         La Plata Leases during the year.

(G)      Replacement  Tons means tons delivered from the South Lease  Extension,
         from the La Plata  Leases in excess of the La Plata  Minimum,  and from
         other sources approved pursuant to paragraph 7 of this Amendment.

(H)      South Lease  Extension means the San Juan Mine Permit Area (as shown in
         Exhibit 1.1 of State Mining Permit 94-01 issued to SJCC on 26 September
         1994) outside of the  Fruitland  Leases and the N1/2 of Sec. 3, T.29N.,
         R.15W., New Mexico
         Prime Meridian.

(I)      CSA Invoice is the monthly invoice prepared in accordance with the CSA.

(J)      Other Terms.  Capitalized terms not otherwise defined herein shall have
         the meanings assigned thereto in the CSA.


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                               CSA Amendment Eight

                                   AGREEMENT:


1.       SJCC agrees to deliver and Utilities agree to purchase Replacement Tons
         in  accordance  with the  provisions  of the CSA,  as  amended  by this
         Amendment.

2.       An amount  equal to the REI  multiplied  by "X" (which may be negative)
         will be added to each CSA  Invoice.  (Such  additions  to  monthly  CSA
         Invoices will be based on the projected number of Fruitland  Substitute
         Tons and  Fruitland  Tons for the year and may be changed  through  the
         year as appropriate.)

         Where

                  X=A-G

         And

                  A=The number of Fruitland Substitute Tons;

                  B=The aggregate  cumulative number of Make-up Tons (as defined
                    in the BHP Sublease) as of the previous year end;

                  C=The RIE Shortfall Balance as of the previous year
                    end;

                  D=The number of Fruitland Tons;

                  E=The REI Minimum;

                  F=(D-E-C), or zero (0), whichever is greater and

                  G=(B-C), or F, whichever is less.

3.       No year during which SJCC  delivers  coal to SJGS from any source(s) in
         aggregate  quantities and at times which are consistent  with paragraph
         4.2 of the CSA shall be a "NonPerformance Year" as defined in paragraph
         9.2(b)(3) and paragraph  9.3(c) of the CSA, so long as said  deliveries
         are otherwise in accordance with the CSA, as amended by this Amendment.

4.       If the total tons mined and  delivered  from all sources in  accordance
         with the CSA,  as amended by this  Amendment,  are less than the sum of
         the  Minimum  Annual  Tons as  described  in  paragraph  9.2(b)(3)  and
         paragraph  9.3(c) of the CSA,  (the Minimum Total Tons") in any year in
         which SJCC was directed,  consistent  with paragraph 4.2 of the CSA, to
         mine and deliver coal in such amounts that the total tons requested for
         said year would be greater  than or equal to the  Minimum  Total  Tons,
         said year shall be defined as a  Non-Performance  Year as  described in
         paragraph 9.2(b)(3) and 9.3(c) of the CSA.


<PAGE>

                               CSA Amendment Eight


5.       SJCC will deliver Replacement Tons pursuant to mining plans approved by
         the Joint Committee  showing that the projected total cost to Utilities
         of Replacement  Tons is less than the projected total cost to Utilities
         for an  equal  number  of  tons  to be  delivered  under  then  current
         operating plans.  Notwithstanding any other provision of this Amendment
         or the CSA,  decisions  of the Joint  Committee  about mining plans for
         Replacement  Tons  shall not be subject  to  arbitration.  All costs of
         mining and delivering  Replacement  Tons will be included in the annual
         operating cost budget  submitted  pursuant to paragraph  12.3(a) of the
         CSA and will be subject to the provisions  thereof.  If SJCC desires to
         deliver  Replacement  Tons for which  plans and  budgets  have not been
         approved  pursuant  to  paragraph  12.3(a) of the CSA,  SJCC shall give
         Utilities as much advance  notice  thereof as possible  (not to be less
         than fifteen  (15) days) and shall  include  plans and budgets  thereof
         said  notice.  Utilities  shall  approve or  disapprove  said plans and
         budgets  within  fifteen  (15)  days of  receipt  of  notification.  If
         Utilities  fail to approve  or to  disapprove  said  plans and  budgets
         within  fifteen  (15) days,  or if they  approve  them,  said plans and
         budgets shall be deemed to be part of the annual operating cost budget,
         and shall be subject to all of the  provisions of paragraph  12.3(a) of
         the CSA.

6.       Replacement Tons will be priced as follows:

         a)       Replacement  Tons mined from the South Lease Extension will be
                  priced  in  accordance  with  paragraph  9.2(a) of the CSA and
                  paragraph 8 of this Amendment.

         b)       Replacement  Tons  minded  from  the La Plata  Leases  will be
                  priced  in  accordance  with  paragraph  9.3(a) of the CSA and
                  paragraph 8 of this Amendment.

7.       Notwithstanding  any other  provisions of this Amendment,  SJCC may not
         deliver  Replacement  Tons from  sources  other  than the  South  Lease
         Extension and the La Plata Leases  without prior  approval by the Joint
         Committee   of   each   additional    source   of   Replacement   Tons.
         Notwithstanding  any  other  provision  of this  Amendment  or the CSA,
         decisions of the Joint  Committee  about  sources of  Replacement  Tons
         shall not be subject to arbitration.

8.       The total  payable  to SJCC  under the terms of  paragraph  9.2(b)  and
         paragraph  9.3(b)  and  (c)  of  the  CSA  in  any  year  during  which
         Replacement tons are delivered will be the sum of

         a)       the  lesser of (i) the La Plata  Minimum or (ii) of the sum of
                  the Fruitland  Tons,  the La Plata Tons,  and the  Replacement
                  Tons mined and  delivered  during the year from sources  other
                  than the La Plata Leases (the "Total SJCC  Tons"),  multiplied
                  by the La Plata  Capital  Investment  Element as  described in
                  paragraph 9.3(b) of the CSA, plus

                                       
<PAGE>

                               CSA Amendment Eight

         b)       the greater of (i) Total SJCC Tons less the  Replacement  Tons
                  mined and  delivered  from the La Plata  Leases (the "La Plata
                  Replacement  Tons")  less the La Plata  Minimum,  or (ii) zero
                  (0), multiplied by the Fruitland Capital Investment Element as
                  described  in  paragraph  9.2(b)  of the CSA  (the  "Fruitland
                  CIE"), plus

         c)       the La Plata  Replacement Tons multiplied by the Fruitland CIE
                  less the Capital  Investment  Element  payable for each ton of
                  coal transported from the La Plata Leases to SJGS in excess of
                  the La Plata  Minimum in any calendar  year under the terms of
                  paragraph  7.2(b)  of the  certain  Transportation  Agreement,
                  dated April 30, 1984, between San Juan Transportation  Company
                  and Utilities, as amended, plus

         d)       the minimum aggregate capital investment element payable under
                  paragraph 9.2(b)(3) and paragraph 9.3(c) of the CSA.

         All  references in this  paragraph 8 to paragraphs  9.2(b),  9,2(b)(3),
         9.3(b), and 9.3(c) of the CSA are to such paragraphs as adjusted by the
         First Supplement,  dated as of July 27,1992, to the CSA, by the Interim
         Invoicing  Agreement dated June 1, 1995 between SJCC and Utilities (the
         "Interim Invoicing Agreement"), and by this Amendment.

9.       The  phrase  "total  tons  mined and  delivered"  as used in  paragraph
         9.2(b)(3)  of the CSA shall mean (i) the  difference  between the Total
         SJCC Tons and the La Plata  Minimum,  or (ii) zero  (0),  whichever  is
         greater.

10.      The phrase "total tons mined and delivered" as used in paragraph 9.3(c)
         of the CSA  shall  mean  the La  Plata  Minimum  or  Total  SJCC  Tons,
         whichever is less.

11.      The phrase  "from the  Fruitland  Leases and the La Plata  Leases in at
         least the  quantities  set forth for each of said sources" in the first
         sentence  of  paragraph  2.1(b) of the CSA is hereby  deleted,  and the
         phrase  "in at  least  the  sum of the  quantities  set  forth  for the
         Fruitland Leases and the La Plata Leases" is inserted in place thereof.

12.      Replacement  Tons  delivered to SJGS under the terms of this  Amendment
         from sources  other than the La Plata Leases shall be added to the tons
         mined and delivered  from the Fruitland  Leases and the La Plata Leases
         to  determine  whether  SJCC  has  satisfied  the  obligation  to mine,
         process,  sell and deliver coal as set forth in paragraph 2.1(b) of the
         CSA as amended by paragraph 11 of this Amendment.

13.      Except as expressly  amended hereby,  the CSA and all prior  amendments
         are in all respects hereby confirmed and ratified.

<PAGE>

                               CSA Amendment Eight

IN WITNESS  WHEREOF,  the parties have  executed  this  Amendment as of the date
first written above.





                                      SAN JUAN COAL COMPANY



                                      By
                                          --------------------------------
                                              Vice President



                                      PUBLIC SERVICE COMPANY OF NEW MEXICO

                                      By
                                           -------------------------------
                                           Senior Vice President


                                      TUCSON ELECTRIC POWER COMPANY


                                       By
                                           -------------------------------    
                                               Vice President

<PAGE>

                               CSA Amendment Eight


BHP Minerals  International  Inc.  (formerly  BHP-Utah  International  Inc.),  a
Delaware corporation and the guarantor of the obligations of SJCC under the Coal
Sales  Agreement  pursuant to Guaranty  dated August 18, 1980 (the  "Guaranty"),
herby  consents to the  foregoing  Amendment  Eight to Coal Sales  Agreement and
agrees that all references in the Guaranty to the Coal Sales  Agreement shall be
deemed to be  references  to the Coal Sales  Agreement as amended by  Amendments
Numbers One to Eight, inclusive.




                                          BHP MINERALS INTERNATIONAL INC.



                                          By
                                              --------------------------
                                                   Vice President




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