* What: BHP Billiton, Rio Tinto quarterly production data
* When: April 16 (Rio Tinto), April 17 (BHP
By James Regan
SYDNEY, April 12 Mining and petroleum company
BHP Billiton is set to report a rise in quarterly
output from its petroleum division after producing more gas in
the United States in response to higher prices.
The increase, by as much as 4 percent over the previous
quarter to about 67 million barrels oil equivalent (mmboe), will
keep BHP on track to meet its fiscal 2013 production
forecast of 240 mmboe.
It will also show the world's biggest diversified miner by
revenue is moving ahead with a strategy of relying more on
petroleum to offset weakness in iron ore, its No. 1 revenue
Iron ore's contribution to revenue fell to 29 percent in the
half-year ended December from 31 percent in the prior six
months. Petroleum accounted for 21 percent of BHP's revenues in
the latest half-year versus 18 percent in the prior period.
BHP, which will release March quarter production data on
April 17, and rival Rio Tinto are both forecast
to report a drop in quarterly iron ore output due to shipping
interruptions caused by cyclones in Australia. Rio Tinto is
releasing production data on April 16.
Uncertainty about global growth and, in particular, about
China, a top user of iron ore and several other commodities, has
cast a shadow on the sector as a whole.
China's economy grew 7.8 percent in 2012, its slowest pace
since 1999. With the country importing less, most industrial
metals are under pressure. Copper and nickel
prices have fallen around 5 percent this year, while zinc
is down nearly 8 percent.
Iron ore prices could halve to as low as $70 this year as
demand from China falls, according to UBS analyst Tom Price.
Goldman Sachs has cut its forecast for iron ore prices by up
to 11 percent over the next three years due to excess supply and
slower steel output in China.
The changing landscape has shifted the focus of investors to
margins and profits from production numbers and led to top
management changes in a number of commodities producers.
The newly installed chief executives of BHP and Rio Tinto
are allocating little funding for new projects outside of iron
ore and copper. In BHP's case new energy projects too are looked
So far this year, natural gas has been the best performing
commodity after cold late-winter weather and above-average
nuclear power plant outages in the United States pushed prices
up more than 20 percent year-to-date.
BHP is calling on U.S. lawmakers to relax export restrictions
on oil and gas and if that occurs it may be encouraged to
accelerate U.S. output, according to analysts.
On iron ore, BHP is likely to show a modest drop in output
to around 40 million tonnes. Copper production, however, is seen
Rio Tinto is expected to also reveal a seasonally affected
slip in iron ore output -- down by as much as 10 percent to
under 46 million tonnes. Iron ore made up 46 percent of the
Anglo-Australian company's revenues in the half-year ended
Cyclone Rusty, which swept down the Pilbara iron belt
coastline in late February, caused temporary closures of the
Dampier, Cape Lambert and Port Hedland ports, which BHP and Rio
Tinto rely on to export ore.
Despite the storm-related setbacks and dire price
predictions, Rio Tinto insists it will meet its target of a 15
percent rise in output this year to 290 million tonnes. The June
and September quarters are typically the strongest for iron ore
production due to the lack of storm activity.
In fact, Rio Tinto, BHP and fellow Australian miner
Fortescue Metals Group plan to add a combined 235
million tonnes of new mine capacity by 2015, nearly equal to
Rio's total output in 2012.
At that rate, by 2018 Australia will be exporting 821
million tonnes, according to Australia's Bureau of Resource and
Energy Economics -- a near-75 percent increase on exports of 470
million tonnes last year.
(Editing by Muralikumar Anantharaman)