Mining giant Rio Tinto raises forecast for 2009 global iron ore production

By The Associated Press

SYDNEY, Australia - Anglo-Australian mining giant Rio Tinto increased its 2009 forecast for global iron ore production after reporting a 12 per cent jump in third quarter ore output.

The company (NYSE: RTP) raised its 2009 iron ore output forecast Wednesday to between 231 million tons (210 million tonnes) and 237 million tons (215 tonnes), up from its previous forecast of 220 million tons.

The company is a major resources player in Canada, where it owns the former Alcan Inc. aluminum company as well as Canada's largest iron ore producer, Montreal-based Iron Ore Company of Canada Ltd., and controls the Diavik diamond mine in the Far North. It also doubled its stake in Vancouver-based Ivanhoe Mines (TSX: IVN.TO) earlier this week to just under 20 per cent.

"We are seeing early signs of a recovery in some of our key markets, although we remain cautious about the near term outlook," CEO Tom Albanese said in a statement.

The company said it has made "considerable progress" in reducing debt.

Rio Tinto produced 52.3 million tons (47.5 million metric tons) of iron ore in the quarter ending September, up from 46.7 million tons (42.4 million metric tons) in the same period a year earlier.

Rio Tinto owns 58.7 per cent of The Iron Ore Company of Canada, Canada's largest iron ore producer and a leading global supplier of iron ore pellets and concentrates used by steelmakers.

The company employs almost 1,900 people in Newfoundland and Labrador and Quebec, where it operates a mine as well as processing and shipping operations.

Other owners of the Canadian company are Japan's Mitsubishi Corp., with 26.2 per cent, and the Labrador Iron Ore Royalty Income Fund (TSX: LIF-UN.TO), with 15.1 per cent.

Earlier this week, Rio Tinto announced it will raise its stake in Ivanhoe Mines to 19.7 per cent after the pair last week signed a deal with the Mongolian government to develop a US$4 billion gold and copper mine in the central Asian country.

Rio Tinto said it will complete the second part of its investment - consisting of 46.3 million shares at a subscription price of $8.38 each - raising its holding in Ivanhoe from the current 9.9 per cent.

The Oyu Tolgoi mine in the Gobi desert is expected to start production in 2013, the company said.

The deal was renegotiated repeatedly after opponents complained it shortchanged Mongolia. Parliament had to repeal a windfall profits tax in August before London-based Rio Tinto and Ivanhoe would agree to go ahead.

Mongolia will own 34 per cent of the mine and receive a $250 million advance payment against royalties and taxes under the agreement signed by its ministers for finance, mining and the environment and executives of Rio and Ivanhoe. It calls for total investment of $4 billion.

Under the deal, the government can buy shares to raise its stake to 50 per cent after 30 years once the miners recoup their initial investment.