(Reuters) – BHP Group Ltd cut its annual copper production outlook on Thursday as operations at its Escondida project in Chile took a hit over protests by workers and environmental activists, as well as labour shortages due to rising COVID-19 cases.

Chile, the world's top copper producer, earlier this month sued BHP among others miners over alleged environmental damages caused by its operations in the Atacama salt flats.

That, along with road blockades, threats of work stoppage over alleged worker contract breaches, and surging COVID-19 infections at Escondida has affected production at the project, which houses the world's largest copper deposit.

"Our Chilean assets experienced a challenging operating environment in the March 2022 quarter due to a reduction in our operational workforce as a result of a significant increase in COVID-19 cases in Chile," the miner said in its third-quarter production report.

Copper production from Escondida is now expected between 1,000 thousand tonnes (kt) and 1,030 kt for 2022, down from its previous range of 1,020 kt to 1,080 kt, resulting in a slight downgrade to total copper output forecast to between 1,570 kt and 1,620 kt.

The miner has logged 1,112 kt of copper output so far this financial year, down 10% from last year. Its third-quarter iron ore output from Western Australia came in flat from last year, and missed consensus estimates.

(Reporting by Sameer Manekar in Bengaluru; Editing by Sherry Jacob-Phillips)