Iron output up, shipments deferred: BHP

BHP Billiton has reported a rise in iron ore production for the first half of the 2009 financial year but said it had received requests from some iron ore customers for deferrals to shipments amid the weak economic environment.

The company said the deferred iron ore tonnages had been sold into the spot market.

BHP Billiton said the company achieved record iron ore shipments and production for the half of 59.18 million tonnes, up 10 per cent from the previous corresponding period.

"Production for the half year and quarter ended December 2008 benefited from the successful ramp up of growth projects at Western Australia Iron Ore and Samarco," BHP said in its report.

"This was in part offset by the impact of the temporary suspension of operations following safety incidents and production interruptions at Western Australia Iron Ore.

"Western Australia Iron Ore is expected to produce 130 million tonnes (100 per cent basis) in the 2009 financial year."

Meantime Total petroleum production increased by 10 per cent to 33.16 million barrels of oil equivalent (mmboe) during the three months to December 31 due to the start-up of growth projects and strong gas sales in WA and Pakistan.

Copper output dropped 11 per cent to 308,200 tonnes during the quarter, with declining ore grade and operational issues at the Escondida mine in Chile offsetting an improved performance at Olympic Dam in South Australia.

BHP Billiton said copper provisional pricing would decrease earnings by $US1.297 billion ($A2.0 billion), while price fluctuations of the red metal and unplanned interruptions at Escondida would decrease earnings by a further $US333 million ($A514.52 million).

Nickel production dropped 15 per cent to 50,200 tonnes, following the Kalgoorlie nickel smelter furnace rebuild and maintenance at the Kwinana nickel refinery in WA.

Production of metallurgical coal, used in steelmaking, increased by 5 per cent to 10.15 million tonnes after the company's operations recovered from floods in Queensland.

Aluminium output declined 8 per cent during the second quarter to 310,000 tonnes due to power restrictions in South Africa and the shutdown of potlines at the Bayside operation.

"Given the very challenging environment the whole industry has faced over the past few months, our production performance was particularly strong," BHP Billiton chief executive Marius Kloppers said in a statement.

The company spent $US357 million ($A551.61 million) on mineral exploration during the half and $US263 million ($A406.37 million) on petroleum exploration.

BHP Billiton said it expects the market to remain weak and uncertain in the short term, but believes the longer term fundamentals for its commodities remain healthy.