This rate was 70% higher than the performance a year ago when Queensland’s coal industry was hard hit by the global steel market slump.

Thermal coal production from the Bowen Basin mine was 179,000 tonnes, 12% lower than the previous quarter.

With total coal production rounded to 1.24Mt for the first three months of 2010, Kestrel could beat the 4.35Mt run-of-mine coal produced in 2009, even though its mine extension project is underway.

The KME project aims to lift production capacity to 5.7Mtpa from 2012, extend the mine life to 2031 and increase the longwall face width to 375m, creating up to 250 jobs in the construction process.

Rio exports about 2Mt of coking coal to India every year and India’s State Minister for Coal Sriprakash Jaiswal toured Kestrel in September last year with Coal India chairman Partha Bhattacharya.

Outside of Kestrel, the Hail Creek open cut mine produced 1.23Mt of hard coking coal for the March quarter, 33% lower than the previous three months but 15% higher year-on-year.

The Blair Athol mine, expected to wind up in 2016, produced 2.14Mt of thermal coal, falling 18% from the previous three months.

The Clermont mine will replace this operation, and kicked off coal production during the recent quarter with first shipments expected in the next couple of months.

While Rio subsidiary Coal & Allied’s share of saleable coal production slipped 20% from the past quarter to 4.22Mt, Rio’s share of its various US coal operations produced 10.07Mt, down 53% year-on-year.

The dip was due to changed shareholdings resulting from the New York float of Rio’s Cloud Peak Energy business which raised $741 million of proceeds.

The company also had an 8% fall in iron ore production from the December quarter along with dips in its copper, gold and uranium output.

A major focus for the global miner will be the development of the massive Oyu Tolgoi copper gold project in Mongolia with Ivanhoe Mines.

“Most of our operations continued to run at capacity,” Rio chief executive Tom Albanese said.

“Chinese demand grew strongly and we saw some recovery in OECD markets, but we are still cautious about short-term volatility.

“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 development of Oyu Tolgoi.”

Rio shares closed down 5c yesterday at $80.05.