Christine St Anne: Rio Tinto and BHP both put out their June quarter production levels, with BHP posting its 12th consecutive iron ore production record. To make sense of the numbers I'm joined by Morningstar�s Mark Taylor.

Mark, welcome.

Mark Taylor: Thanks, Christine.

St Anne: Mark, so these production numbers, were they inline with your expectations?

Taylor: Overall, marginally softer. Very, very strong iron ore numbers, higher than expected, up about 10% for BHP and about 15% for Rio, so very strong. But that was more than offset on balance by a slightly weaker than expected copper output, and some of the other lesser divisions; BHP Petroleum was a little bit softer than expected too. So, the overall impact was about a 5% hit to our earnings forecast for fiscal 2012.

St Anne: Mark, on that point of iron ore production, Rio Tinto�s levels were softer than BHP and the markets seem to be concerned. Are those concerns valid?

Taylor: I don't believe so. I mean, I'm not sure that that's taking into consideration the growth path that each company has got. Rio has got very, very strong iron ore growth path, expansions are underway and iron ore is far more important to Rio than it is for BHP. It made up 85% of group earnings before interest and tax for the last half, so very, very substantial.

So, the markets probably scrutinized Rio's numbers more closely because it's more meaningful to that company, but I think that both companies, the growth in volume is in line with their expansion plans.

St Anne: Mark, are the production levels of these two big miners reflective of their earnings outlook?

Taylor: Yes and no, I mean they are in the sense that they�re pretty much in line with the expectations of their iron ore numbers, but the big issue is the pricing. I mean, that's where all the sensitivity is and the iron ore price has come off a bit of late from about $160 a ton down to about a $130 a ton. It doesn�t sound like a lot, but it will impact margins. So, it swings and roundabouts.

St Anne: Mark, when the two miners put out their production levels, their share price is fell, with the mining index falling to its lowest level in three years. Is the market concerned about the companies or it's about more the macro issues?

Taylor: I don't think the response has been into what's - anything that�s been announced in the quarterly reports. I mean the numbers were mildly soft, but nothing to write home about. I think the market is just looking forward - looking to all the negative commentary coming out of Europe and China, and has been for some time, and is in a frame of mind to jump on anything that's not hugely positive. So, I think that's just a sign of the times rather than anything that could be gleaned specifically from the reports.

St Anne: Finally Mark, we're coming into the earnings season, are you expecting any surprises from Rio or BHP?

Taylor: Not any surprises as such, but there will be some negatives to come out, particularly in an abnormal sense. I mean from Rio you�re likely to see more aluminum write-offs. I'm expecting a similar sort of thing from BHP with respect to petroleum, with their shale gas acquisitions. I think these things are sort of � particularly with BHP, are sort of marking-to-market, rather than a genuine long-term negative, but those sorts of things, but nothing that's unexpected.

St Anne: Mark, thanks so much for your time today.

Taylor: You're welcome Christine.