Due to its declaration of a force majeure in the early part of April, mining giant BHP Billiton (ASX: BHP) had been using its stockpile of coking coal to meet export commitments. This is amidst the company's struggle to maintain operations affected negatively by a prolonged labour dispute and bad weather.

BHP warned that unless a solution is found, its sales would be affected in the coming quarters.

Although BHP reported a 10 per cent rise in its production of metallurgical coal to 7.3 million metric tonnes on a year-on-year basis, its March quarter production went down 14 per cent compared to the December 2011 quarter because of the heavy rainfall in Queensland and industrial action at seven mines.

"The extent to which industrial action will continue to affect production, sales and unit costs is difficult to predict, (but) with inventories now severely depleted, the impact on future quarters may be significant," BHP said in a statement.

Coking coal, which is used in steel production, contributes about 10 per cent of BHP's earnings. Analysts estimate that if BHP lost six months worth of coking coal sales, the company's earnings would go down by 4 per cent. A Deutsche Bank analyst reckons that BHP loses about 400,000 tonnes of sales weekly which would likely impact earnings per share by 0.15 per cent.

While BHP's coking coal production suffered, its iron ore production improved by 14 per cent on a year-on-year basis, but slumped 8 per cent from the previous quarter due to the temporary closure of ports caused by the cyclones that hit the Pilbara coast.

Analysts estimate that BHP lost over 3 million tonnes of iron ore production which at current prices are valued at about $500 million.

The Construction, Forestry, Mining and Engineering Union, which led the 16-month long strike at BHP's seven mines, accused BHP of planning to bring in contract workers for the recently closed Norwich Park mine. The union based its charge on a job ad that BHP alleged posted to which a current union member applied and was advised to bring his resume the following week. BHP explained that the recruitment agency that posted the ad two weeks ago was not aware that the miner planned to close the Norwich Park mine. The ad has been removed from the Internet, a BHP spokesman said.

Despite the decline in production, BHP said its guidance for full-year production from Western Australia will not change, estimated at over 159 million tonnes of iron ore.

To solve the problem of BHP and other mining companies with unions, Swedish mining equipment manufacturer Sandvik has a possible solution. It is through unmanned loaders and dump trucks that could be controlled from a remote location, which would mean underground mine workers may no longer be needed.

Besides providing a possible solution to the mining firm's union headache, it could also increase production and safety, and machine maintenance cost could be smaller due to more predictable ways of operating these equipment.

BHP said that while it is open to proven technology, it has no plans for full automation. BHP's competitor, Rio Tinto, has ordered driverless trucks which it plans to use in its various sites.

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