Rio Tinto iron ore production surges for Chinese steel

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Iron ore output by the world's second largest producer jumped 49 per cent in the fourth quarter. Analysts suggested miners such as the Anglo-Australian firm and rivals BHP Billiton and Brazil's Vale could achieve big price rises after recoiling in 2009.

Rio Tinto wants to improve production six per cent to 230 million tonnes this year and believes it can achieve 330 million within five years, taking advantage of prices that are up 120 per cent since November 2008.

Commodities analyst Lachlan Shaw, of Commsec Securites, said the market consensus was "calling for a price increase in excess of 30 per cent" but that mines opening this year could take momentum out of the market.

China's steel industry is the largest consumer of seaborne iron ore and last year refused to sign off on a 33-44 per cent price fall endorsed by other Asian steel mills, saying it deserved deeper cuts.

Rio's ties with China, Australia's biggest trading partner with commerce worth $53 billion last year, have been strained by the country's detention of four Rio staff, including Australian citizen Stern Hu, since July over accusations of illegally obtaining commercial secrets.

On Monday Australia's foreign office and Rio Tinto said the Chinese investigation into the case, which has put a cloud over iron ore price talks, had been sent to prosecutors.

Australia exported $15 billion worth of iron ore to China in 2008, 41 per cent of China's iron ore imports.