BHP Billiton Boosts Iron-Ore Production Outlook

SYDNEY--BHP Billiton Ltd. (BHP) boosted its outlook for iron-ore production for the second time this fiscal year, saying it expected to produce more of the steelmaking ingredient than expected thanks to a strong performance from a new Australian mine and productivity improvements across its operations.

The world's biggest mining company said Wednesday it expected to produce 217 million metric tons of iron ore from its Australian mines in the year through June, up from previous guidance of 212 million metric tons and an initial estimate for the year of 207 million tons. The lift in output signals confidence China's rapid industrialization will continue to lift demand for the raw material used for building everything from cars to skyscrapers. BHP produced 187 million metric tons of iron ore from its Australian mines last financial year.

A key factor in the higher guidance figures--which include the share of output of minority venture partners--has been improvements to its supply chain, as well as the start of production at a new mine, Jimblebar, ahead of schedule. BHP also said it had only seen limited disruptions from bad weather in Australia's northwest in recent months.

In a quarterly report, the group said its independent share of iron-ore production increased by 23% to 49.6 million tons in the three months through March compared with a year earlier.

BHP also reported a 28% rise in production of metallurgical coal, used in steelmaking, and an 11% lift in thermal coal, used to generate electricity. It increased its full-year guidance for metallurgical coal production by 2.5 million tons, to 43.5 million tons.

Quarterly petroleum output totaled 60.9 million barrels of oil equivalent, up 10% on year, largely because of a lift in production from its Atlantis oilfield in the Gulf of Mexico. The company trimmed its full-year estimates by 2% following the sale of its Liverpool Bay oilfield in the U.K. and on expectations of lower gas production in the Hawkville area of the Eagle Ford.

The miner's aluminum business, meanwhile, continued to struggle.

"Challenging conditions in the aluminium industry continue to persist," the company said as it announced it would cut its capacity at the Alumar refinery in Brazil by 58,000 tons in the current quarter through June. It had already cut output there in 2013 and said total group aluminum production fell 6% on-year last quarter to 286,000 tons.

Write to Rhiannon Hoyle at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires