BHP just cut its iron ore guidance

Protestors at the Vale headquarters in Rio de Janeiro. Mario Tama/Getty Images

The fatal mine disaster in Brazil, poor weather in Australia and maintenance on the rail network have dragged on BHP’s iron ore output.

The world’s biggest miner, in its third quarter production review, cut its full year guidance by 10 million tonnes to 260 million tonnes for iron ore out of Western Australia.

Rio Tinto has also reduced its expectations for iron ore from Western Australia but has kept its full year guidance.

Mining companies have been increasing production, and cutting costs, in a bid to make up for shrinking revenue as falling commodity prices reduce margins.

Today BHP said iron ore output for the nine months to March was down 1% to 171 million tonnes.

CEO Andrew McKenzie says productivity improved despite disruption from bad weather and maintenance of the rail network.

Full year guidance is being maintained for petroleum, copper and coal.

The production results for the latest nine months:

Source: BHP

BHP Billiton and its partner Vale have an agreement with authorities in Brazil on the cleanup of the fatal iron ore mine disaster, setting the costs around $US2.3 billion over the next six years.

Shares in BHP Billiton this week hit a five month high on the back of better commodity prices, closing yesterday at $19.67.