BHP Billiton chief Marius Kloppers said on Wednesday that China's steel surge had peaked and iron ore and steel growth was likely to decline, as the miner delivered a mixed quarterly production report.

BHP produced 39.77 million tonnes of iron ore in the three months to September 30 -- just one percent higher than a year earlier and three percent lower than the preceding quarter as China's slowdown hit commodities.

Metallurgical coal, another key steelmaking ingredient, was down four percent on-year at 8.94 million tonnes.

Kloppers said the China steel boom had peaked, with supply shortages all but met and the Asian giant entering a new phase in its modernisation that would see average annual growth of around eight percent for the next decade.

"Steel intensity per unit of GDP will continue to moderate and growth rates for iron ore and coal are likely to decrease," Kloppers said in a speech after the release of BHP's September quarter production report.

"The record prices we experienced over the past decade, driven by the demand shock, will not be there to support returns over the next 10 years," he added.

"What we can instead expect is demand growth at more predictable and sustainable levels and more moderated pricing.'

As a result Kloppers said it was "difficult to envisage" further investment in its Australian coal operations, where recent increases in state government royalties and a bullish exchange rate have compounded profitability issues.

BHP suspended some Australian coal projects and put expansion plans on hold this year as falling commodity prices saw its annual net profit dive 35 percent to US$15.42 billion. Other major miners have taken similar steps.

"While our resource base in Queensland (state) is very high quality the heavy cost of taxes, royalties, declining productivity and a strong Australian dollar means that further investment to grow these operations is much less likely," Kloppers said.

However, he remained upbeat on the mining industry's broader outlook, with the global iron ore market set to grow by 650 million tonnes by 2020 -- down from 800 million tonnes between 2000-2010 but still "significant".

"At the same time the progressive transition into a consumption-based economy implies increased demand for commodities other than steel, such as copper, energy, aluminium and so on," added Kloppers.

"As the middle class continues to grow, better diets will also imply a higher demand for commodities such as potash."

Melbourne-based BHP reported a 24 percent jump in quarterly copper output from the September quarter last year, reflected by higher grade ore at its Escondida mine in Chile and record quarterly production at Antamina in Peru.

There was a significant bounce in petroleum products -- which Kloppers said was key to BHP's resilience -- up 19 percent from the previous corresponding period, including a 30 percent surge in gas output.

Zinc production was up 11 percent from the previous September quarter, uranium up four percent, silver production was steady while lead output dropped six percent.