BHP Billiton reduces Brazil iron ore pellet output

SYDNEY — BHP Billiton Ltd.'s Brazilian operations will reduce iron ore pellet production due to weak demand, the Australian resources company said.

BHP's 50 percent-owned Sarmarco iron ore company will close two of its older plants from the end of November until mid-January, and then reassess the market, the company said in a statement Saturday. It did not say what would happen to staff at the plants.

Samarco's third iron ore pellet plant, opened in April this year, will remain in operation. BHP previously said it has no plan to cut iron ore pellet production in Australia.

The closure will temporarily reduce Samarco's annual iron ore pellet production capacity from 24.19 million tons (22 million metric tons) to 8.51 million tons.

BHP Billiton's chief executive of ferrous and coal Marcus Randolph said global market conditions were proving challenging for the iron and steel sector.

"There is no doubt that these are very challenging times across the whole industry, and there is substantial uncertainty around the short term outlook," Randolph said in the statement.

The move follows a decision last month by Brazil's Vale, the world's largest iron ore producer, to cut its annual ore production by 33 million tons as demand for steel crumbles because of the global economic crisis.

BHP Billiton is the world's third-largest iron ore producer.

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