By Melanie Burton
MELBOURNE April 19 (Reuters) - BHP Billiton Ltd cutits 2018 fiscal year iron ore output guidance on Thursday citingissues in its railroad car unloading system, while also slightlyraising its copper output expectations given higher productionat the Escondida mine.
The miner cut projections for fiscal 2018 iron oreproduction by 2 percent to between 272-274 million tonnes ofiron ore from 275-280 mllion tonnes due to "car dumperreliability issues."
A car dumper is a machine that unloads bulk cargoes fromrail road cars.
Overall, the outcome of the global miner's third quarterproduction was balanced as lower iron ore output and easedguidance should be broadly offset by a slight pick up in thirdquarter copper production and upgraded guidance, saidSydney-based brokerage Shaw and Partners in a report.
BHP narrowed its full-year copper guidance to 1.70-1.785million tonnes from the earlier range of 1.655-1.790 milliontonnes, as production at the world's biggest copper mineEscondida surged by 64 percent.
Given a boom in commodity prices, BHP is also looking at asignificant uplift to earnings, the broker noted.
"The latest mark to market for BHP using spot forex andcommodity prices – points to 20-30 percent earnings uplift," itsaid.
BHP shares rallied 3.1 percent on the Australianstock exchange on Thursday, in line with a broad rally acrossthe mining sector after Russia sanctions disrupted the globalaluminium supply chain and lit a fire under producers,particularly those making nickel, aluminium, alumina.
"The 2018 March quarterly result was softer than ourestimates across the board, with the exception of the coppergroup, where Escondida performed solidly and improvedutilization rates at Pampa Norte offset a slower than expectedramp-up at Escondida," said RBC analyst Paul Hissey in a report.
"We view BHP as fair value, and view the stock as on parwith RIO," he said.
BHP said its copper production target was affected by a"slower than planned" ramp-up in production during the Marchquarter at its Olympic Dam facility in South Australia.
BHP's iron ore output rose to 67 million tonnes in the threemonths ended March 31, compared with 62 million tonnes a yearago.
BHP also noted that it had approval from regulators toincrease capacity at its Port Hedland operations to 290 milliontonnes of iron ore per annum which it intends to reach by theend of fiscal 2019, it said.
"BHP remains on track to achieve six per cent volume growthfor the 2018 financial year," BHP Chief Executive AndrewMackenzie said in the group’s quarterly operations review.
The miner said its decision to exit its underperforming U.S.shale oil and gas business last year was going as planned.
BHP reiterated it expected bids by June 2018 and added thattransactions could be announced in the first half of the 2019financial year.
Sky News last month reported Royal Dutch Shell Plcand U.S. private equity firm Blackstone Group LP wereworking on a joint $10 billion bid for BHP's U.S. shale assets.(Additional reporting by Rushil Dutta in Bengaluru;Editing by Tom Brown and Darren Schuettler)
