UPDATE 1-BHP December quarter iron ore output up 3 percent

Tue Jan 22, 2013 6:09pm EST

* BHP December quarter iron ore output up 3 pct
    * Some analyst were expecting slightly bigger gain
    * BHP sees FY 2013 output at 183 million tonnes
    * Escondida copper set for 20 pct output rise in FY 2013
    * Australian nickel and alumina units under pressure


    By James Regan
    SYDNEY, Jan 23 (Reuters) - BHP Billiton ,
the world's biggest mining company, reported its quarterly iron
ore output rose 3 percent, slightly under analysts' estimates,
as it races to keep pace with demand from Chinese steelmakers.
    Iron ore production rose to 42.2 million tonnes in the three
months ended Dec. 31 from 41.1 million in the same period a year
ago.
    BHP is one of three mega-iron ore miners along with Brazil's
Vale and Rio Tinto  that together
account for two-thirds of the global sea-borne iron ore trade.
    Analysts had pegged BHP's December-quarter production at
between 45 million and 49 million tonnes, based on shipping
export data from the Port Authority of Port Hedland.
   The quarterly performance swept half-year output to 81.96
million tonnes of iron ore at its Western Australian operations,
up two percent on the same period in the previous year. 
    The company repeated its fiscal 2013 guidance of 183 million
tonnes.
    Despite worries about slowing expansion that at one point
last year sent iron ore prices below $100 a tonne, imports by
China surged by 8.4 percent last year to a record 743.6 million
tonnes., encouraging suppliers to lift output.
    China's economic outlook has improved markedly since the
government announced a slew of approvals for railway
investments, highway projects and other infrastructure projects
in September worth an estimated $160 billion.
    Still, the increase in global supply, much of it provided by
the big three, is expected to outpace a recovery in demand from
China, meaning prices this year may struggle to regain their
January peaks, a Reuters poll this week showed. 
    China's iron ore imports are expected to grow by 25-50
million tonnes this year, according to the China Metallurgical
Mining Enterprises Association, a slower pace than previous
years.
    
    In copper, improvements at the giant Escondida copper mine
in Chile puts the mine on track for a 20 percent rise in output
in fiscal 2013, according to the company.
    BHP's nickel and aluminium divisions, which analysts have
suggested could face hefty writedowns in value over the next two
quarters due to worsening market conditions and oversupply, saw
mixed output in the December quarter. Alumina was up 23 percent
versus the year-ago quarter, while nickel declined 10 percent.
    "From a broader perspective, the strong Australian dollar
and weak pricing environment continued to place pressure on the
group's Australian alumina and nickel operations," the company
said.
    BHP's also said it spent $2.1 billion on onshore drilling
and development work in the United States between July 1 and
Dec. 31, 2012 and expects to spend the roughly the same in the
second half.
     Over 80 percent of the funds will be focused on its Eagle
Ford and Permian assets, it added.
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