BHP Billiton is expected to face a challenging few months as risk-averse investors abandon the stock despite positive production numbers.
Shares in the world's biggest resources company hit near three-and-a-half year lows on Wednesday, despite a largely positive June quarter production report.
BHP lifted annual iron ore production by 19 per cent to 159.5 million tonnes (mt) and achieved a record annualised shipment rate of 179mt to the end of June.
However shares in BHP, the largest entity on the ASX, slumped 61 cents, or two per cent, to $30.18 as shareholders moved into higher dividend yielding stocks such as banks.
Investment banks had slashed profit forecasts for BHP in the lead-up to the production report's release.
The miners are often criticised for not paying higher dividends but UBS head of resources research Glyn Lawcock said BHP was not in a position to change that even if it wanted to.
It had an estimated $US20 billion ($A19.47 billion) in committed capital for next year and possibly beyond, having spent about the same in the current financial year, Dr Lawcock said.
Earnings are dropping and gearing is increasing, with analysts' consensus for a full year net profit of about $US16.9 billion to be reported in August compared to $US23.6 billion last year.
"Iron ore names are taking it in the neck and for the next one to two months there is more downside than upside in price and with weak steel pricing we expect to eventually see steel production cuts," he told AAP.
"I think the company is well placed to manage through this but that doesn't mean the share price has to respond."
Analysts told AAP the company would not commit to its expensive major expansion projects soon, including at the Outer Harbour at Port Hedland, Olympic Dam, Escondida copper mine and Jansen potash site.
One analyst suggested chief executive Marius Kloppers was under some board pressure in relation to those projects, in light of this year's near $US20 billion purchase of US shale assets.
BHP may write down their value as low gas prices have left the assets lossmaking, but it is also committed to spending $US4-5 billion on them next year.
"It seems the board has given him the clear steer that if he's taking big ticket projects to the board they've got to be really robust," the analyst said.
BHP was probably doing engineering work and trying to reconfigure its expansion projects so they could be staged with less upfront capital, the analyst said.
Iron ore production for the quarter increased year-on-year by 15 per cent to a record 40.89 million tonnes in the three months to June.
BHP also flagged a five per cent rise in 2013 iron ore production, with a commitment to expanding production to above 225 million tonnes.
The petroleum division - estimated to be worth at least 20 per cent of earnings - performed well with the integration of the onshore shale contributing to a 40 per cent rise in volumes to 222.34 million barrels of oil equivalent.
However, BHP warned that its 2012 earnings would take a $US265 million ($A259.49 million) hit related to outstanding copper sales.
Analysts believe the coal division will be lucky to break even following recent protracted strike action in Queensland.