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Rio Tinto Raises Iron Ore Forecast

The miner raised its 2010 iron ore production guidance to 234 million tons to 230 million tons, year-on-year growth of 7.6%.

LONDON (

TheStreet

) -- Global iron ore production by

Rio Tinto

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rose 39% in the first quarter from a year earlier and the minor raised its iron ore forecast for the year.

Most of Rio Tinto's operations continued to run at full capacity, thanks to strong demand growth from China and a recovery in the OECD markets.

China's gross domestic product

rose 11.9% in the first quarter, higher than economists' estimates.

Rio Tinto also raised its 2010 iron ore production guidance to 234 million tons to 230 million tons, year-on-year growth of 7.6%.

"The long-term outlook remains very strong and we are now ramping up our growth projects with sustained investment in our iron ore business and the start of the development of Oyu Tolgoi, a copper and gold project in Mongolia," Rio Tinto CEO Tom Albanese said in a statement Thursday.

The company guided to alumina production growth of 9.1% to 9.6 million tons during 2010. However, mined and refined copper production is likely to decline by 15.5% and 7.9% to 680,000 tons and 380,000 tons, respectively.

Shares in Rio Tinto closed 0.06% lower in Australia Thursday. Trading at about $246 in New York, Rio Tinto is currently trading at an attractive price-to-earnings ratio of 10.8, lower than

BHP Billiton's

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15.7 and

Vale's

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13.2.

>> Who Owns Rio Tinto?: Ken Fisher

Analysts polled by

Bloomberg

estimate Rio Tinto will report earnings of $6.33 a share for 2010 and $7.26 a share for 2011, compared with 2009 earnings of $2.76 a share.

The stock

has eight buy, three hold, and no sell ratings, according to

TheStreet's

Analyst ratings guide.

During the quarter, Rio Tinto's production of gold, bauxite, and hard coking coal increased 12%, 58%, and 35%, respectively on a year-on-year basis. In contrast, copper and uranium output declined by 16% and 20%, respectively.

Rio Tinto reduced its net debt by around $4.5 billion and completed asset sales of $10.3 billion during the quarter. The company plans to spend at least $5 billion this year toward capex with an additional potential of $1 billion for capital projects.

Rio Tinto continues to fund a number of major exploration and evaluation projects during 2010. The company has plans to expand iron ore production capacity at the Pilbara mines to 330 million tons a year by 2015 from 53 million tons during the first quarter of 2010. Other major evaluation projects include the Simandou iron ore project and the La Granja and Resolution copper projects.