The company is also struggling to maintain margins in a climate of growing costs and will continue to tweak its operations to meet benchmarks, it said with its quarterly announcement.

“In response to ongoing cost pressures and high inflation impacting the coal business in Australia, Rio Tinto is taking actions to reduce controllable costs and increase productivity,” it said.

On August 8, Rio Tinto announced that its Blair Athol thermal coal mine in Queensland would finish mining operations by the end of 2012.

The company announced in July it would retrench staff from its Clermont open cut coal mine in Queensland less than two years after it opened, the result of low thermal coal prices.

All Queensland coal producers expect to cut costs and reduce staff at their mines in response to the increase in royalties announced in the recent state budget, according to a survey of chief executives by the Queensland Resources Council.

The Kestrel mine has seen its extension costs blow out by $900 million as speculation mounts that it may have to cut jobs.

Rio Tinto said 50% of the Kestrel cost overrun resulted from the high Australian dollar, 20% was from higher inflation, while 30% was due to delays and scope changes.

The Kestrel project is for a 20-year extension and expansion from 4.3 million tonnes per annum to 5.7Mtpa.

The investment will extend the life of Kestrel to 2031, with first coal from the extension expected to come on stream in the second quarter of 2013.

Rio Tinto produced 2.3 million tonnes of hard coking coal for the three months to September 2012, 714,00t of semi-soft coking coal, and 5.4Mt of thermal coal.

Rio Tinto Australia’s thermal coal production was 18% higher than the third quarter of 2011 and 7% higher than the year to date in 2011.

This reflected increased plant capacity at Bengalla in NSW, the continuing ramp-up at Clermont in Queensland, and changes in mine sequence following the revised mine closure plan at Blair Athol.

On June 25, Rio Tinto announced it had exported its first shipment of premium hard coking coal from its Benga in the Moatize Basin of Mozambique.

During the quarter, production at the Benga mine continued to ramp up. Work is progressing to expand capacity on the Sena railway line, which remains the system bottleneck, according to Rio Tinto.

Benga provides a substantial Tier 1 coking coal development pipeline in the emerging Moatize Basin, the company said.

In 2012, Rio Tinto’s share of Australian hard coking, semi-soft coking and thermal coal production is expected to be 8.5Mt, 3.5Mt and 19.5Mt, respectively.