By Neil Hume in Sydney
BHP Billiton, the world?s biggest mining company, has increased forecasts for its iron ore division after a record-breaking performance from its operations in the Pilbara region of Western Australia.
BHP said it had mined 41m tonnes of iron ore in three months to the end of December and now expected full year production to exceed its previous guidance of 159m tonnes.
Analysts had expected BHP produce around 39m tonnes of ore during the quarter. Iron ore is BHP?s biggest business and is forecast to account for 40 per cent of group earnings before interest in the 2011/12 financial year.
The record output from BHP comes a day after rivals Rio Tinto and Fortescue Metals also reported strong shipments of iron ore.
Rio said it had surpassed its global iron production target of 240m tonnes by producing a record 245m tonnes in 2011.
The news help allay mounting concerns about China?s appetite for iron ore, a key ingredient in steel making. Figures out this week showed the Chinese economy had grown at its weakest pace in two-and-half years during the fourth quarter.
Fortsecue, which shipped 14.8m tonnes during the final three months of last year, said demand from Chinese, Japanese and Korean markets remained strong.
However, the price the company received for its ore iron was around 10 per cent below market expectations as customers ordered increased quantities of lower-grade ore in an effort to keep down costs.
Iron ore prices have been volatile in recent months, swinging between a high of $170 a tonne October to a low and $110 a tonne.
BHP said additional loading capacity at Port Headland, Australia?s highest tonnage port, and increased production from a processing plant had contributed to the record performance from its iron ore business.
The company also reported a 13 per cent increase in production from its petroleum business to 58m barrels of oil equivalent during the fourth quarter, helped by contributions from recently acquired US shale gas assets.
Copper output rose 27 per cent to 280,000 tonnes as its operations in Chile recovered from recent industrial action. However, a fall in copper prices means BHP will take a $258m hit to to earnings before interest on sales agreed in the previous fiscal year but subject to final pricing adjustments.
BHP also revealed a weak performance from its aluminium division, which it said continued to be ?challenged by underlying cost pressures and weaker prices. On Tuesday, Rio warned that it expected its aluminium business to record a small loss in the second half of 2011.
In early morning trading in Sydney, shares in BHP were up 0.3 per cent at A$36.80.
? The Financial Times Limited 2012