BHP cuts FY16 iron ore output target by 10 million tonnes

SYDNEY (Reuters) - BHP Billiton (BHP.AX) (BLT.L) on Wednesday cut its fiscal 2016 iron ore production guidance by 10 million tonnes to 260 million tonnes due to bad weather and rail maintenance, further reducing ore shipments into an oversupplied global market.

The cut follows plans by fellow miner Rio Tinto (RIO.AX) (RIO.L) to lower its 2017 guidance by up to 20 million tonnes and could help fuel a faster-than-expected recovery in iron ore prices, which have already risen nearly 40 percent this year.

"Western Australia iron ore production of approximately 260 million tonnes is now anticipated for the 2016 financial year, 4 percent below prior guidance, however unit cost guidance remains unchanged at $15 per tonne," BHP said in its quarterly review.

A cyclone that ripped through Western Australia state's Pilbara iron ore mining belt in late January caused widespread disruptions to the world's single biggest source of sea-traded iron ore.

BHP's supply issues have been compounded by a halt to output at it Samarco 50-50 joint venture in Brazil since early November after a dam break flooded nearby villages, killing 19 people and leaving hundreds homeless.

BHP said the mine, which normally produces around 20 million tonnes a year, remains suspended. Production for the nine months to March 31 stood at 11 million tonnes.

Rio Tinto blamed delays in its driverless train programme for reducing its iron ore production guidance to between 330 million and 340 million tonnes next year, down from 350 million tonnes.

(Reporting by James Regan; Editing by Richard Pullin)