If you want to know where commodity supplies and prices are headed, it pays to listen to what the big mining and production companies are saying.

If you want to know where commodity supplies and prices are headed, it pays to listen to what the big mining and production companies are saying. Inevitably, there will be different accounts, because what they’re producing and how they’re producing it is different. But viewed collectively, the producers can still give you a pretty good idea about what it all means to the future supply, and price, of commodities.

So what are the big producers saying? In a nutshell, although there have been a few bumps along the way (due to higher labor costs and shortages of equipment), commodity producers have maintained a brisk pace in their mining operations, and expect that pace to continue for the foreseeable future.

Take the world’s biggest mining company - Australian powerhouse BHP Billiton (NYSE: BHP) - which digs for all kinds of metals and minerals, including copper, aluminum and even oil. In its recent mid-annual report, BHP said it set records in its iron, copper, and manganese ore operations. However, not everything went smoothly. The company said it was facing tighter labor markets and shortages of the mining equipment, creating a double whammy of higher costs and schedule delays. BHP has an oil-and-gas field in the Gulf of Mexico whose price tag is going to rise to $1.5 billion from $1.0 billion, and it has a Brazilian aluminum refinery that has experienced a 40 percent rise in costs and an entire year’s delay in production.

BHP Billiton didn’t feel the effects everywhere; in fact, despite the pressure on costs and timetables, the company remains determined to boost output to take advantage of high commodity prices. From the mid-year report: “We have managed to achieve record production at a time when the market is very overheated. Costs are increasing but we are driving volume growth to increase output into a tight market.”

If BHP Billiton is the Mohammed Ali of the mining industry, then Rio Tinto PLC, also of Australia, is Joe Frazier. In its recent quarter, the company reported nearly identical trends to BHP: cost pressures and mine shutdowns kept production down, particularly in copper and coal, but demand remains very strong so they see no reason to cut production.

And then there are the Chinese, who everyone knows are one of the biggest consumers of commodities, but who are also starting to make an impact on the supply side as well. Shenhua Energy Co, one of the world’s largest coal companies, is setting its sights on becoming a diversified mining company along the lines of BHP Billiton and Rio Tinto. In Australia, Shenhua has invested hundreds of millions of dollars in coal and iron mining operations. So this non-traditional producer will soon become a new, powerful source of commodities supplies.

In the bigger picture, companies and mining analysts envision fewer disputes and strikes this year now that workers have negotiated contracts at many big mines. In addition, you can expect major investments to start up in the intermediate term that will create additional supply. BHP has a big nickel mine in Australia, while Chile’s Vale do Rio Doce has a new nickel mine in New Caledonia. But both projects have been hampered by high costs and delays, and neither project will begin serious production until sometime in 2008. As always, there is a long lag time in the commodities industry, and while producers are catching up, they are taking their time. All of this explains why if there is a any drop in commodities supplies and prices, it may be short lived.