The world's largest mining company has reported record half-year production levels. BHP Billiton remains upbeat about commodity markets.

Record output figures were seen in natural gas, alumina, iron ore, aluminium, manganese and copper.

Although best known for its mining activities, BHP has broader exposure to the natural resources sector. Newly commissioned petroleum projects should see it become a bigger player in the energy sector.

Uranium production was its highest since the last three months of 2004 after BHP improved recovery levels from its Olympic Dam mine in Australia. However, it still had to buy third party uranium on the spot market to meet contractual requirements. This will decrease earnings by $94 million for the half-year to 31 December 2007.

Nickel production fell by 11% in the trading period after scheduled maintenance at its Kalgoorlie smelter reduced output.

Iron ore increased by 8%. Analysts expect selling prices for 2008 could rise by up to 50%.

Shares in the mining company had slipped 3% to £12.58 by 9.45am on Wednesday.

BHP's record output levels met City expectations but the mood towards commodity prices is changing among institutions.

Research by Reuters published yesterday showed the the City believes nickel and zinc prices could fall by 23% during 2008. Aluminium and copper are seen to slip 5% year-on-year and tin the only metal expected to post a gain.

ABN Amro said the poll indicated that the base metal cycle had peaked. Mining companies are battling higher operating costs but they may still be able to squeeze another year of record profits.

'It was clear that several price bulls have fallen off their super-cycle,' said ABN Amro on the research. 'Despite this capitulation, if the survey forecast price averages are fulfilled, they imply handsome prices for the miners for 2008-09.'

BHP gave no comment on how its bid preparations were proceeding for rival mining house Rio Tinto. It has until February 6 to make a formal offer.