Rio Tinto Group, the world’s third- largest mining company, reported a drop in production of steelmaking coal, copper, diamonds, zinc and lead as the industry struggles to grow at a time of record-high prices.

First-quarter coking coal output fell 27 percent after weather disrupted supplies from Australian and mined copper dropped 6 percent, the London-based company said today in a statement. Chief Executive Officer Tom Albanese is fighting off a hostile $158 billion bid from BHP Billiton Ltd.

Miners are battling power shortages, bad weather, surging costs and digging out lower quality deposits as they attempt to exploit the global boom in demand for metals. Prices for coking coal and iron ore have surged to a record this year because of supply constraints and rising demand from steelmakers.

“The weather impacts were fairly material in a number of metals, including coal, iron ore and diamonds,” Rob Craigie, a senior analyst at FW Holst & Co. in Melbourne, said by phone.

Rio rose 360 pence, or 6 percent, to 6,367 pence at the close on the London Stock Exchange, the highest since at least 1989 according to data compiled by Bloomberg. That’s a premium of 1.4 percent over the value of BHP’s offer of 3.4 BHP shares for each Rio share. BHP climbed 5.4 percent to 1,865 pence. Declines in coal and copper were forecast by UBS AG in an April 14 report.

Albanese is arguing that Rio is undervalued by BHP’s all- share offer and says his company doesn’t need to combine with BHP to boost production. Rio plans to expand metals and minerals output, including a tripling of iron-ore supplies. BHP is scheduled to deliver its quarterly report on April 23.

`BHP Expectations’

“Relative to the expectations of BHP’s report next week, Rio has done relatively well,” Holst’s Craigie said. “The expectation in the market for BHP’s report has been progressively downgraded.”

Rio declared force majeure on shipments from its Hail Creek mine in Queensland state for five weeks in February and March after heavy rains. Force majeure is a legal clause that allows companies to cancel deliveries due to unforeseen events.

Asian steelmakers agreed this month to pay BHP and Mitsubishi Corp. $300 a ton for coking coal, up from $98 a year earlier.

“It is disappointing they are not able to take advantage of the high coal prices,” said Mark Pervan, a senior commodity strategist at Australia and New Zealand Banking Group Ltd. in Melbourne. “They have timed the iron ore increase well to take advantage of these high prices.”

Iron Ore Record

Iron ore production rose 16 percent to a record even as cyclones during the quarter in Western Australia’s Pilbara region crimped output, Rio said.

Mined copper production fell to 185,600 metric tons and refined copper output declined 23 percent because of lower grades mined at Kennecott in the U.S. and Grasberg in Indonesia, Rio said. Refined copper output at Escondida, the world’s biggest copper mine, was 21 percent lower because of low oxide leach production, Rio said in the statement.

Diamond production fell 35 percent because of heavy rain at the Argyle mine in Western Australia and extreme cold at the Diavik mine in North America, making testing equipment unreliable, it said in the statement.

Bauxite, alumina and aluminum output all reached new highs compared with a year earlier after including the production from last year’s $38.1 billion acquisition of Alcan Inc, Rio said.

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