The two large Australian mining firms, BHP Billiton (ASX: BHP) and Rio Tinto (ASX: Rio) are expected to report next week 4 per cent lower of total estimated iron ore output for the March quarter.

The lesser output, equivalent of up to 4 million metric tonnes, is because of the inclement weather and labour problems at ports and mines, as well as lower demand from China.

Although the price of iron ore with 62 per cent iron content is at $148.7 per tonne, the highest since Oct. 18, there is lower supply and lesser demand. As early as March, the outgoing iron ore chief of BHP, Ian Ashby, warned of flattening iro ore demand growth from China which caused mining shares to go down and knocked the Australian currency,

Heavy rains and cyclones at Rio Tinto's Parburdoo mines and BHP's Mt Newman mines in the March quarter resulted in 2 million metric tonnes lost shipment each for the two miners.

Rio will issue its quarterly production report on April 17 and BHP on April 18. An analyst of CLSA Asia Pacific Markets forecast that Rio would report a March output of 55.3 million tonnes and BHP 38.6 million tonnes.

Data from the port authority appears to support the analyst forecast. According to Port Hedland which is used by BHP, Fortescue Metals and Atlas Iron, iron ore shipments went down to 18.66 million tonnes in March from 19.58 million in February.

For coal, Credit Suisse estimates a 10 per cent reduction in BHP's metallurgical coal output for the Match quarter to 7.625 million tonnes due to the heavy rainfall at the Bowen Basin mines and current labour problems.

Despite the lower output, Australian mining companies are determined to pursue $10 billion expansion plans. The firms are also anticipating better output for the current quarter due to better weather at the Pilbara area in Western Australia.

The lower commodity prices are also expected to result in questions from shareholders at the next meeting over the larger and costlier projects the two miners are planning.

"Every time you spend an extra billion, it is an extra billion that isn't there for potential dividends and the average return on the investment goes down," Reuters quoted RBC Capital analyst Des Kilalea.

"Shareholders are desperately concerned about capex inflation. Capex inflation without a concomitant increase in the underlying price of the commodity is not good and at the moment we are seeing commodity prices flat to down," the analyst added.

Rio is scheduled to meet its London-based investors on April 19. Expected to be included in the shareholders' meeting is the rising cost at Rio's Oyu Tolgoi copper-gold mine in Mongolia, which is controlled by Rio through Ivanhoe Mines.

BHP had informed investors it is living within its means, particularly in relation to its projects in the Olympic Dam, Outer Harbour, shale gas in the U.S. and the Jansen potash project in Canada.

Deutsche Bank estimates that these four very large projects would need over $120 billion capex over 15 years but would only boost returns beginning 2023.

"You have got to be certain that the quality of the assets you have are really good and that they are going to earn good long-term returns over 20, 30 years. You have to have the capability and the confidence to keep investing through all cycles, all the way through," Aberdeen Asset Managers Deputy Head of UK and European Equities James Laing told Reuters.

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