Bad weather, labour disputes hit iron ore production

BHP Billiton posted sharp declines in coal and iron ore production for the first quarter of this year as bad weather and labour disputes hit key revenue drivers at the world's biggest mining company.

Iron ore output hit 37.9m metric tonnes in the first three months of this year, the company said in a statement Wednesday, compared with 33.2m tonnes in the same period in 2011. The figure is around 8 percent lower than the three months ending in December. Copper production was up 3 percent from a year ago at 281,400 tonnes. Nickel output was up 26 percent to 41,700 tonnes while thermal coal production dipped 2 percent to 17.2 million tonnes.

The figures follow similar reports from mining rival Rio Tinto earlier this week, suggesting the two biggest firms in the sector have struggled to maintain output levels in the face of extreme weather and labour unrest. BHP had to declare forced majeure on deliveries from several of its mines around the world as work stoppages in six facilities have caused rolling disruption.

China's rapid economic growth - and its related steel demand - has helped both BHP and Rio increase capacity and profitability. BHP said last month is expects China steel demand to rise by about 1.1 billion tonnes by 2025 from a current level of around 700 million. It expects its own iron ore capacity will have doubled by 2020 thanks in part to a $22bn expansion of its export harbour in Western Australia.

BHP shares were up around 1 percent in early London trading to change hands at 1,944 pence. The shares have advanced about 3.7 percent since the beginning of the year, broadly in line with the FTSE 100 benchmark.