PERTH (miningweekly.com) – Diversified mining group BHP Billiton on Wednesday cut its iron-ore production expectations for the 2016 financial year by ten-million tonnes, on the back of adverse weather conditions in the Pilbara and the initiation of an accelerated rail network maintenance programme.

The mining company reported that it would produce 260-million tonnes of iron-ore in the financial year to the end of June 2016. The group aims to boost capacity to 290-million tonnes “over time”.

BHP’s guidance adjustment comes a day after Rio Tinto maintained its iron-ore forecast for 2016 at 350-million tonnes, but lowered its guidance for 2017 by 20-million tonnes to between 330-million and 340-million tonnes.

BHP reported that its Western Australian iron-ore operations had delivered 61-million tonnes during the three months to March, which was up 4% on the previous corresponding period.

In the nine months to March, the operations delivered 193-million tonnes of ore.

The Western Australian iron-ore operations saw a 2% increase in production during the nine months, to end at a record 193-million tonnes, reflecting the Jimblebar mining hub operating at full capacity, as well as improved ore handling plant use at the Newman operation.

This increase in production was partially offset by one-off operational issues in December, following adverse weather conditions, as well as the Samarco operation, in Brazil, remaining suspended following the failure of a tailings dam in November last year.

Petroleum production during the quarter reached 59.4-million barrels of oil equivalent, down by 3% on the March quarter in 2015, while year-to-date production was reported at 184.1-million barrels of oil equivalent.

BHP told shareholders that the slight decline in production reflected a reduction of onshore US activity, as well as the divestment of the company’s gas business in Pakistan. This was offset by a strong performance from the conventional business unit.

Meanwhile, copper production for the three months under review reached 400 000 t, down 12% on the previous corresponding period, while production for the nine months to date was recorded at 1.2-million tonnes.

The miner noted that copper production was negatively affected by a grade decline at the Escondida operation, in Chile, where copper production for the year-to-date decreased by 20%, to 711 000 t.

The Olympic Dam operation, in South Australia, reported record production of 162 000 t during the nine months under review, reflecting improved smelter and mill use and the Svedala mill outage in the previous period.

BHP also reported that metallurgical coal production for the quarter was up 4% on the previous corresponding period, to 10-million tonnes, with the year-to-date production reaching 31-million tonnes, while energy coal production was down 24% in the quarter to eight-million tonnes, and down 10% in the year-to-date, to 27-million tonnes.

Queensland coal production remained flat as record production from six mines, underpinned by increased plant and equipment use, offset the completion of longwall mining at the Crinum mine, which was now on care and maintenance.

Energy coal production from New South Wales decreased by 10% during the nine-months ended March, with production affected by heavy rainfall, blasting constraints and the progression of the mine plan through a higher strip ratio zone.

“The productivity of our company continues to improve notwithstanding the disruption largely caused by adverse weather in this quarter,” said BHP CEO Andrew Mackenzie.

“Over the last 12 months, we have taken a number of steps to strengthen BHP Billiton, including asset sales and the deferral of investment for long-term value. While these measures will reduce our output this year, they have increased our focus on our highest-quality operations and will support stronger margins and returns.”

Mackenzie reiterated that the simpler organisational structure, following the spin-out of South32, would promote greater efficiency, rapid sharing of best practice, and adoption of new technology to deliver the next level of safe productivity.

He pointed out that BHP was on track to deliver an average unit cost improvement of 14% across its major assets, as productivity gains continued to be realised.

“Debottlenecking our assets, at very low cost, will generate high returns and substantial value. We have a pipeline of projects in copper and oil that allow us to bring high margin volumes to market when the time is right. And as others cut back on exploration, our investment will go further and help create new options for the future,” Mackenzie added.