Western Australian iron ore (WAIO) production for the nine months to March 31 jumped 16% to 188 million tonnes, a new record, but slightly below UBS forecasts of 190Mt.

It included March quarter production of 64.3Mt, or 55.4Mt attributable to BHP.

The company attributed the strong result to the continued improvement in supply chain performance, the successful ramp-up of the Jimblebar hub to more than 45Mt per annum, and less wet season impact.

The division also achieved record sales of 190.3Mt for the first nine months of FY15 on a 100% basis.

As a result, BHP lifted its full-year WAIO guidance by 2% to 250Mt. 

BHP CEO Andrew Mackenzie said the company’s commitment to costs and productivity was helping to mitigate lower commodity prices.

“In iron ore, our focus remains on producing at the lowest possible cost with Western Australia Iron Ore unit costs now below $US20 per tonne as we continue to improve productivity,” he said. 

“Over the last decade, China’s unprecedented demand growth provided Australia and BHP Billiton with a unique opportunity. 

“We acted swiftly to bring on new iron ore capacity at some of the lowest costs globally, generating long-term value for shareholders, the government and communities which would otherwise have been lost to overseas competitors. 

“Despite the subsequent increase in supply-side competition, these low-cost expansions continue to deliver attractive margins and returns through the cycle.”

BHP expects to be able to get to 270Mtpa without the need for additional fixed plant investment, as existing infrastructure continues to outperform.

But the company will defer the Inner Harbour Debottlenecking project, which would have taken capacity to 290Mtpa by the end of FY17.

RBC Capital Markets estimated the project would have had capital costs of at least $600 million.

BHP said while its path to 290Mtpa would be slower, it would come at a lower capital cost.

Overall, BHP group production for the nine months rose 9% with records across 10 operations and five commodities, keeping the company on track to deliver output growth of 16% over the two years to the end of FY15.

Copper production rose by 2% during the period to 1.3Mt, though the company reduced full-year guidance by 6% to 1.7Mt due to the mill outage at Olympic Dam and heavy rain in Chile.

Metallurgical coal production jumped 14% to 38Mt due to record volumes for Queensland Coal and Illawarra Coal.

Full-year guidance was lifted by 4% to 49Mt.

Petroleum output rose 6% to a record 193 million barrels due to a boost in onshore US liquids volumes, though the company cut US onshore rigs by 35% during the quarter due to the slump in the oil price.

Alumina, aluminium, manganese and nickel – all to be demerged into South32 – posted lower output for the nine months to March 31.

Guidance for Nickel West, the only asset to be excluded from the spin-off, was lowered by 5000t to 90,000t. 

The company said the demerger of South32 remained on track. Shareholders are set to vote on the deal in Perth on May 6.

BHP group exploration for the nine months was $203 million, of which $148 million was expensed.

Shares in BHP dropped 2.1% to $A29.94.