BHP Billiton output shows clout of mega miners

In its September-quarter activities report, BHP outlined plans to boost output by 5 per cent by the end of June 2013, relying on the higher tonnages to reduce costs and cushion the impact of lower selling prices. BHP said quarterly iron ore production was steady at 39.8 million tonnes.

Over the past decade China has replaced Japan as BHP's biggest customer, particularly for iron ore, which can be mined more cheaply in Australia than at home.

Some 100 million tonnes of low-quality Chinese production had become unprofitable in the past month or two and is ripe for closure, making room for more imported ore, even in a falling market, mining executives estimate.

In Australia, Fortescue, Atlas Iron and BC Iron are also lifting output, though they face higher costs.

BHP and Rio Tinto boast some of the world's lowest production costs of around $20-$30 per tonne. That provides a strong competitive advantage against domestic Chinese production, which can run as high as $100 per tonne.

Australia's iron ore exports to the world's biggest steelmaker have grown at more than double the pace this year of China's total iron ore imports. In the first eight months of 2012, official data showed China imported 8.7 per cent more iron ore than a year ago. But imports from top supplier Australia rose by 20 percent to 222.7 million tonnes.

Australian

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