BHP Billiton on Wednesday posted sharp drops in iron ore and coal production over the March quarter due to bad weather and labour unrest.

Iron ore output fell 8 percent, while metallurgical coal production was down 14 percent against the previous quarter, the world's biggest miner said in its latest quarterly operations report.

BHP said production from its Queensland collieries supplying steel-making coal was still constrained as a result of an ongoing campaign of rolling work stoppages and other industrial action by roughly a third of its workforce coupled with the impact of heavy rains.

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

Iron ore output totalled 37.9 million tonnes, down 8 percent from the December quarter though 14 percent higher versus the same period a year ago.

Copper production rose 3 percent from a year ago to 281,400 tonnes in the March quarter, which included 87,700 tonnes of mined copper and 47,400 tonnes of copper cathode from the Escondida mine in Chile, the world's largest copper mine, BHP Billiton said.

BHP Billiton is the world's third-biggest iron ore miner behind Brazil's Vale and Rio Tinto , and the second-largest copper producer after Chile's Codelco.

Rival Rio Tinto disappointed the market on Tuesday reporting weaker-than-expected iron ore, copper and coal output for the March quarter.

BHP and Rio have both been huge beneficiaries of China's rapid growth and urbanization in recent years which has helped them sell everything they mine. However, last month BHP Billiton said it saw signs of flattening in iron ore demand from China, hitting its shares and the Australian dollar.

Heavy rains and two early-season cyclones that drenched Rio Tinto and BHP iron ore pits early in the last quarter combined with high sea swells generated by Cyclone Lua in late March at the key export terminal ports of Dampier, Cape Lambert and Port Hedland.

(Reporting by James Regan; Editing by Lincoln Feast and Ed Davies)