BHP Billiton cuts iron ore target by 10M tonnes

World’s largest miner BHP Billiton (ASX:BHP) cut Wednesday its iron ore production target for the year by 10 million tonnes to 260 million tonnes, becoming the second largest miner to do so this week.

The Melbourne, Australia-based company said the guidance revision followed adverse weather over the last quarter and railway maintenance work.

This would be the first time BHP reports an annual drop in seaborne output since it completed its merger with Billiton in 2001.

2016 would be the first year BHP reports a drop in iron ore output since it completed its merger with Billiton in 2001.

The miner, the world’s no. 3 iron ore producer, also trimmed its export guidance for the commodity for the second time in the last three months. It now expects to sell 229 million tonnes of the steelmaking material for the year to June 30, or about four million tonnes less than last year.

Despite the bleak figures, BHP chief executive Andrew Mackenzie said he was confident productivity was improving across the firm’s divisions.

"We have taken a number of steps to strengthen BHP Billiton, including asset sales and the deferral of investment for long-term value,” he said in a statement. “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."

Iron ore prices have recovered from 2015’s historic lows, rallying nearly 45% so far this year and even breaching at one point the psychologically important $60 level. The sector, however, remains cautious as both actors and analysts alike expects a return to lower prices given the scale of oversupply in the industry.