Bethlehem Steel Corp has signed an unprecedented agreement with China to develop and expand an ancient iron ore mine at Shuichang -- apparently the first large ferrous mining project awarded by Peking's government to a western company.

Under the accord, reported from Peking by a visiting delegation of American businessmen and confirmed by Bethlehem Chirman Lewis W. Foy last night, the nation's second-largest steel manufacturer will furnish technical, engineering and management advisory services for the new mine.

Bethlehem spokesman Henry Von Spreckelson said he could neither confirm nor deny reports that the agreement is valued at more than $100 million.

The mine at Shuichang, in Southwest China, is one of many outdated iron and steel facilities in that nation. China recently began a program to seek industrial modernization through deals with capitalist nations.

An existing open pit mine at Shuichang will be expanded in a major way and Bethlehem will provide "planning and testing services" for construction of two modern facilities -- a beneficiation plant and a pelletized plant.

The beneficiation process is used to improve the quality of iron ore, making it uniformly suitable for blast furnaces while pelletization involves concentrating the ore into marblesized pellets, for more efficient blast furnance operation.

Bethlehem's agreement yesterday followed two trips to China last summer by company geologists and engineers and a subsequent visit to the firm's facilities in this country by, a delegation headed by Hsu Chih, vice chairman of the China Society of Metals.

The American company also will provide services in connection with the procurement and production stages if a satisfactory agreement is reached at a later date, Von Spreckelson said.

Bethlehem's deal with China was described by Foy as "the first step" in an innovative project of the steel company's management to sell its engineering and consulting knowledge to developing countries.

The steel firm has established a new subsidiary, Bethlehem International Engineering Corp., to sell such services, and the subsidiary signed a contract for the Shuichang mine with China National Technical Import Corp., in Peking.

Von Spreckelson declined to discuss how Bethlehem will be paid for its services but there was some speculation last night that Bethlehem eventually may import some of the mine's output as partial payment. Other western countries recently have established joint venture operations with China but the Bethlehem agreement appears to be different.

Bethlehem's accord apparently involves only a sale of services and consulting, with China operating the modernized mine after the U.S. steel people depart. The Bethlehem decision to provide such technical aid comes at a time when the American industry continues to sound alarms about increased imports of steel in the domestic economy and could point to a new strategy by the U.S. firms to tap overall world markets.

"With Bethlehem's long experience in the construction of steel plants and mining facilities, the technical competence of our employes and the opportunities available to us, we look forward to this new endeavor," said Foy in a prepared statement.