BHP Billiton Ltd. (BHP.AU) has posted a 10% drop in fourth quarter iron ore output to 27 million metric tons, with a series of accidents and the impact of expansions blamed for the lower output.

Analysts said the weaker iron ore output was roughly in line with expectations and that BHP's fourth quarter production report released Wednesday was generally solid, with strong showings from metallurgical coal and petroleum.

Total iron ore production for the year from BHP's mines in the Pilbara region of Western Australia state on a 100% basis was 124.8 million metric tons, below previous guidance for 130 million tons.

BHP's Iron Ore President Ian Ashby had warned in May that the iron ore output was likely to come in "a few million tons short" of the guidance due to disruptions caused by a series of accidents at the miner's operations.

Five workers have died at BHP's West Australian operations this financial year and the resulting shut downs and safety reviews have taken their toll on output.

BHP said Wednesday that safety initiatives had affected the fourth quarter iron ore production as had the tie in of its Rapid Growth Project 4 expansion project, which was set to continue to impact output.

Copper production for the quarter fell 21% on year to 307,200 tons and BHP said provisional pricing impacts on the red metal were set to decrease earnings by US$936 million.

Petroleum output for the quarter rose 4% on year to 37.56 million barrels of oil equivalent as new projects boosted production.

BHP's share of metallurgical coal output rose 4% on year to 9.5 million metric tons due to stronger demand conditions, particularly from Asia.

That took its share of full year production to 36.4 million tons, at the upper end of BHP's guidance for output to be between 10% and 15% lower than capacity of about 40 million tons.

Macquarie analyst Brendan Harris said the quarterly figures were solid and that no one had been expecting BHP to match the 8% increase in quarterly iron ore output that Rio Tinto Ltd. (RTP) posted last week, given the impact of accidents.

"Rio was always going to have the kick in the iron ore volumes and BHP wasn't going to be able to match that but on the flip side, BHP has had a nice kick in the (metallurgical) coal volumes and the petroleum figures look great," he said.

BHP and Rio have agreed to bring their iron ore operations in the Pilbara together into a joint venture and, if the plan goes ahead, BHP is set to move its mines to an owner operator model, shifting away from the contracting model that many blame for its poor safety record.

The miner said it sold 68% of its Pilbara ore at benchmark prices, meaning the remaining 32% was sold on the spot market.

Rio Tinto said last week that it has sold half of its iron ore on the spot market in the six months to June 30.

Chine Restocking Over, US, Europe, Japan Starting

BHP said that in the short term underlying demand trends for commodities were being masked by de-stocking and restocking activities.

"China inventory build is essentially complete, while we are now seeing evidence that restocking has commenced in North America, Europe and Japan," BHP said.

BHP's manganese ore output fell 32% to 500,000 tons as the company cut back production in the face of sagging prices.

Alumina production fell 4% on year to 1.1 million tons for the quarter and aluminum dipped 5% to 310,000 tons partly on power shortages in South Africa.

Energy coal production for the quarter fell 5% on year to 17.7 million tons due to the planned closure of a mine in South Africa.

At BHP's Olympic Dam mine in South Australia state, slated for a massive expansion that could cost up to US$15 billion, uranium output for the quarter rose 12% on year to 1,154 tons while copper cathode production fell 20% to 42,600 tons.

-By Alex Wilson, Dow Jones Newswires; 61-3-9292-2094; alex.wilson@dowjones.com