Rio Tinto says its expansion program has paid off with quarterly production records set in iron ore and alumina in the three months to June.

The mining giant said production of iron ore, which is the largest contributor to Rio’s earnings, increased 13 per cent to 41.9 million tonnes from a year earlier as the company continued to increase output from its Pilbara mines in Western Australia.

Rio Tinto chief executive Tom Albanese said production records had been achieved despite losing two-thirds of its gas supply to its Pilbara operations as a result of a fire at Apache Energy’s Varanus Island processing plant in June.

“We’ve done some maintenance juggling, but we have not had a significant impact on production,” he said. “We continue to watch the consequences of that. Certainly we’ve had to switch into some higher priced natural gas and switch from natural gas to diesel in some cases.”

A return to full gas supply is not expected for another six months, however, Rio said its expansion projects remained on schedule.

Meanwhile, Rio’s takeover of Alcan last year also helped boost the company’s aluminium division in the second quarter with bauxite production up 100 per cent, alumina up 231 per cent and aluminium up 374 per cent.

Mr Albanese said the company’s Australian coal operations had also recovered swiftly from floods in central Queensland in the first quarter, with thermal and coking coal production up 15 per cent and 25 per cent respectively on the same time last year.

Mined copper results were mixed, with a 27 per cent drop at Bingham Canyon in the United States, a 22 per cent increase at the Escondida mine in Chile and a 27 per cent rise at the Grasberg joint venture in the Indonesian province of Papua.

Mr Albanese said despite some very difficult conditions on financial markets worldwide, the mining sector would continue to prosper.

“Metals and mining prices are not being propped up by the speculators. It’s fundamentals like supply, demand and the cost of production that’s driving up record prices that we are now seeing in aluminium, copper, iron ore and coal. These are the same trends we expect to see continuing for some time into the future,” he said.

He said China’s gross domestic product continued to grow at about 10 per cent a year while the potential in India was “huge”.

However, he said Rio was “not immune” to rising input costs including caustic soda, sulfuric acid, explosives and fuel.

But he ruled out diversifying into oil to mitigate increasing energy costs.

“I think our competency is in mining and that’s where we work very well,” he said.

Mr Albanese also said Rio had provided information to the European Union’s antitrust regulator regarding BHP Billiton’s takeover proposal for the company.

“From the beginning we’ve said that we will respect the various pre-conditional regulatory processes and that we would respond on a factual basis, and that’s exactly what we have done,” he said.

The proposed takeover requires regulatory approval from regulators in the European Union, US, Australia and South Africa.

Rio shares fell 56c to $121.44.

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