Australian thermal and coking coal production were up 15% and 25% in the second quarter year-on-year, recovering well from the heavy rainfall experienced in the first quarter.

While hard coking coal output recovered in Queensland, Hunter Valley production of semi-soft coal increased to take advantage of stronger prices.

Rio said while semi-soft prices had not been agreed with customers, at June 30 about 1.37 million tonnes had been provisionally priced at $US200–220 per tonne.

Vessel queues off Newcastle Port also dropped allowing the miner to produce in line with allocations.

Rio said it expected a "modest" increase in capacity in the second half of 2008 and into 2009 with expansions at Newcastle and Dalrymple ports.

Rio's Australian mines produced 7.6Mt of coal during the quarter, with the Kestrel longwall kicking in 806,000t for the quarter and 1.3Mt for the first half of the year.

Output from American mines remained steady at almost 31Mt. Increased production from the successful ramp-up of the overland conveyor at Jacons Ranch was offset by the effects of rail delays following severe flooding in the Midwest.

Chief executive Tom Albanese was positive on future prices.

“Chinese GDP is continuing to grow at around 10 percent per annum, demand is strong while supply remains constrained,” he said.

“Fundamentals, not financial speculation, are driving the record prices we are realising across aluminium, copper, iron ore and coal and we see the same trends continuing into the future.”