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BHP posts record annual iron ore output on productivity improvements

(Adds chief executive comment, background, guidance)

July 18 (Reuters) - Anglo-Australian miner BHP Billiton Ltd said iron ore production in its fiscal fourth quarter rose 3 percent as productivity improved, cementing a record annual output as it set a bigger target for the current year.

The world's biggest miner's iron ore output rose to 72 million tonnes during the three months through June, compared with 70 million tonnes a year ago.

Full-year production came in at 275 million tonnes. BHP set a fiscal 2019 production target of 273-283 million tonnes.

"We have delivered a strong finish to the 2018 financial year with an eight per cent increase in annual production and record output at Western Australia Iron Ore, Queensland Coal and at our Spence copper mine in Chile (Stuttgart: 704599.SG - news) ," BHP Chief Executive Andrew Mackenzie said.

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UBS (LSE: 0QNR.L - news) had estimated fourth-quarter iron ore shipments to remain almost constant year over year at 71.7 million tonnes on a 100 percent basis.

The miner added that it expects to record a charge of $650 million in fiscal 2018 results for BHP Billiton Brasil on account of the Samarco Dam failure.

BHP also said that its plan to divest its underperforming U.S. shale oil and gas business is on track and added that transactions could be completed later in the year.

The race for onshore shale assets in the Eagle Ford, Permian, Haynesville and Fayetteville basins, is led by British oil giant BP Plc which made an offer worth well in excess of $10 billion, people familiar with the matter told Reuters in June.

(Reporting by Aditya Soni in Bengaluru, editing by G Crosse and Diane Craft)