The drop in production was mitigated by stockpiling and increased production from the company’s Illawarra Coal in New South Wales, with sales declining by 15% in the December quarter.

“The decision to increase pumping and drainage capacity following severe wet weather in the March 2008 quarter has minimised inpit water accumulation, although heavy rainfall that persisted for much of the December 2010 half-year has significantly restricted overburden removal,” BHP said.

“When combined with disruption to external infrastructure, we expect an ongoing impact on production, sales and unit costs for the remainder of the 2011 financial year.”

BHP’s total metallurgical coal production for the December quarter came in at 7.78 million tonnes.

The company continues to assess the impact of the extreme weather events and has confirmed that force majeure has been declared for the majority of its Bowen Basin operations, including Goonyella Riverside, Peak Downs, Norwich Park, Gregory Crinum, South Walker and Blackwater.

While Illawarra Coal recorded another quarter of “robust production” of 1.8Mt, the company warned that two longwall moves were expected to constrain volumes in the March 2011 quarter.

Total production for energy coal for the December quarter was 16.5Mt.

Quarterly production records were achieved at Hunter Valley Energy Coal for both the quarter and half-year, reflecting first production from the MAC20 project.

In late September last year, BHP finally received NSW government approval for its $A784 million MAC20 project to extract up to 36Mt per annum of raw coal.

The MAC20 project involves an open cut expansion to the Mt Arthur mine, which will lift saleable thermal coal production by 3.5Mtpa.

Record exports from Hunter Valley Energy Coal for the quarter and half-year, which included a greater proportion of high ash sales, also reflected the ongoing ramp-up of the Newcastle Coal Infrastructure Group port facilities.

The increase in sales is occurring as operations experience adverse movements in currency markets, particularly in South Africa and Australia, and additional operating costs ahead of full production from the delivery of growth projects, BHP said.

Elsewhere, record rainfall continued to constrain production at Cerrejon Coal in Colombia. Production in the Americas was lower than the September quarter, largely due to an unplanned outage at New Mexico Coal (USA).