* BHP December quarter iron ore output up 3 pct * Some analyst were expecting slightly bigger gain * BHP sees FY 2013 output at 183 million tonnes * Escondida copper set for 20 pct output rise in FY 2013 * Australian nickel and alumina units under pressure By James Regan SYDNEY, Jan 23 (Reuters) - BHP Billiton , the world's biggest mining company, reported its quarterly iron ore output rose 3 percent, slightly under analysts' estimates, as it races to keep pace with demand from Chinese steelmakers. Iron ore production rose to 42.2 million tonnes in the three months ended Dec. 31 from 41.1 million in the same period a year ago. BHP is one of three mega-iron ore miners along with Brazil's Vale and Rio Tinto that together account for two-thirds of the global sea-borne iron ore trade. Analysts had pegged BHP's December-quarter production at between 45 million and 49 million tonnes, based on shipping export data from the Port Authority of Port Hedland. The quarterly performance swept half-year output to 81.96 million tonnes of iron ore at its Western Australian operations, up two percent on the same period in the previous year. The company repeated its fiscal 2013 guidance of 183 million tonnes. Despite worries about slowing expansion that at one point last year sent iron ore prices below $100 a tonne, imports by China surged by 8.4 percent last year to a record 743.6 million tonnes., encouraging suppliers to lift output. China's economic outlook has improved markedly since the government announced a slew of approvals for railway investments, highway projects and other infrastructure projects in September worth an estimated $160 billion. Still, the increase in global supply, much of it provided by the big three, is expected to outpace a recovery in demand from China, meaning prices this year may struggle to regain their January peaks, a Reuters poll this week showed. China's iron ore imports are expected to grow by 25-50 million tonnes this year, according to the China Metallurgical Mining Enterprises Association, a slower pace than previous years. In copper, improvements at the giant Escondida copper mine in Chile puts the mine on track for a 20 percent rise in output in fiscal 2013, according to the company. BHP's nickel and aluminium divisions, which analysts have suggested could face hefty writedowns in value over the next two quarters due to worsening market conditions and oversupply, saw mixed output in the December quarter. Alumina was up 23 percent versus the year-ago quarter, while nickel declined 10 percent. "From a broader perspective, the strong Australian dollar and weak pricing environment continued to place pressure on the group's Australian alumina and nickel operations," the company said. BHP's also said it spent $2.1 billion on onshore drilling and development work in the United States between July 1 and Dec. 31, 2012 and expects to spend the roughly the same in the second half. Over 80 percent of the funds will be focused on its Eagle Ford and Permian assets, it added.