SANTIAGO, Feb 16, 2012 (Dow Jones) -- Production at Chilean copper mine Escondida, controlled by global diversified miner BHP Billiton Ltd. (BHP, BHP.AU), fell 25% year-on-year in 2011 due to a strike and falling ore grades.

The world's largest copper mine produced 819,261 metric tons of copper last year, versus 1.086 million tons in 2010.

The output drop was the result of July 21-Aug. 5 workers' strike, stoppages due to inclement weather and a reduction in ore grades, or the amount of copper contained in the mined material.

The mine produced 283,485 tons of cathodes, which have a higher added value due to the industrial processes needed to fabricate them. It also produced 535,776 tons of copper concentrates in 2011, the company said in a brief statement.

Sales for 2011 fell 20% on the year to $7.41 billion, due to the lower output.

Higher international copper prices, however, held sales back from a steeper drop, the company said. Copper averaged $3.99 a pound in 2011, a 17% increase from the average it fetched in 2010, the copper miner said.

Escondida's net profit fell 36% on the year to $2.76 billion.

The taxes the company paid reached $746 million, of which $641 million were income taxes and $145 million in copper mining royalties. The taxes paid in 2011 were 39% lower than in 2010.

BHP has a 57.5% stake in the Escondida. Anglo-Australian mining company Rio Tinto PLC (RIO, RIO.LN) holds 30%, and the remaining 12.5% is held by a Japanese consortium led by Mitsubishi Corp. (MSBHY, 8058.TO).

Production is expected to recover somewhat this year and increase in coming years as BHP and Rio Tinto earlier this week approved investments totaling $4 billion to increase capacity.

Escondida's owners announced that, after an exploration campaign, more resources had been found at the mine. Mineral resources were increased by 17% and ore reserves are now 25% higher as a result of the finds.