BHP third quarter output down in 'challenging conditions'

BHP Billiton has cited challenging market conditions for third quarter falls in production of iron ore, copper, petroleum and aluminium. The world's largest mining company produced 87.4 million tonnes of iron ore in the three months to March, a one per cent decline from the corresponding period the year before. This followed BHP Billiton suspending operations in Western Australia after a worker was killed in March, the fifth fatality this financial year. Aluminium production was down four per cent on the March quarter in 2008 to 304,000 tonnes, with production for the financial year so far down seven per cent to 923,000 tonnes. "This quarter's production reflects management's proactive and decisive actions in response to the challenging market conditions,'' the company said in a statement today. "These actions include previously announced production curtailments in Samarco, Samancor Manganese and across our metallurgical coal operations,'' it said. BHP Billiton said in a statement that medium term market conditions remained uncertain and all operations were under review. "We will continue to take appropriate actions in any business that is cash negative and set to remain so, or where there is lack of demand,'' BHP Billiton said. While third quarter production was lower, the miner said there had been record petroleum and iron ore production in the first nine months. Iron ore production for the nine months to March rose six per cent to 87.37 million tonnes from the year before, as the company expanded projects. "Production for the nine months was only seven per cent lower than the comparative period, despite a 10 per cent mandatory reduction in power consumption across the South African operations,'' the company said. Copper production was sharply down on the corresponding period last year, off 14 per cent to 282,8000 tonnes on the affect of lower grade ore and reduced operations at the giant Escondida mine in Chile. For the financial year to date, copper production declined by nine per cent to about 899,900 tonnes. Production of lead was down 30 per cent on last year's figures to 47.2 million tonnes, and off 14 per cent for the first nine months of this financial year. Zinc production for the March quarter was up ten per cent on the corresponding period last year, with 39,397 tonnes of the metal produced, while uranium production was off eleven per cent on the back of lower grades at Olympic Dam. Lower head grade at Cannington and wet weather was blamed for a big drop in silver production. Silver production declined 22 per cent on the corresponding period last year, to 8.73 million ounces, and it was down eleven per cent for the financial year to 30.55 million ounces. Metallurgical coal production was up eleven per cent on the March 2008 quarter to 7.6 million tonnes and up three per cent for the past three quarters. The company said the rise in metallurgical coal was due to the full recovery from 2008 flooding in Queensland and operational improvements. In its quarterly exploration and development report, also released on Wednesday, the company said there had been no significant change to BHP Billiton's financial position other than the issue of $US3.25 billion ($A4.58 billion) in global bonds. The report said that in the nine months to March 2009 the company had spent $US514 million ($A723.94 million) on minerals exploration. "Grassroots exploration continued on targets in Australia, Chile, Argentina, Zambia and Gabon, and on diamond targets in Canada,'' the company said.