UPDATE 1-Rio Tinto's iron ore plans on track, despite China slowdown
* Says to hit 290 mln/yr capacity rate by end of Q3
Q2 iron ore output, including JVs, up 7 pct to 66 mln T
* Copper loss from Bingham Canyon landslide less than expected
* Shares in Australia up 1.4 pct, outpace broad mkt
SYDNEY, July 16 (Reuters) - Miner Rio Tinto is pressing ahead with plans to boost iron ore production by at least 10 percent as it counts on rising sales to steel mills in China, even as its economy slows.
The world no. 2 producer of the steelmaking raw material said on Tuesday it will proceed with expansion work in Australia to lift annual operating capacity to 290 million tonnes by the end of September.
Production guidance for calendar 2013 was unchanged at 265 million tonnes, taking into account additional ore from the expansion in the fourth quarter.
The Anglo-Australian miner's optimism comes as China's economy cooled further in the second quarter, leading to June iron ore imports by the world's top user dropping 9.1 percent to a four-month low.
In its second-quarter production report, Rio Tinto also said infrastructure work to expand its iron ore division to a further 360 million tonnes a year by the end of 2014, estimated by analysts to carry a $5 billion price tag, was "currently underway."
Rio had previously been expected to dig new mines to reach the higher production level. The company said on Tuesday the extra iron ore could come from either new mines, or from incremental extra tonnes out of existing mines.
In Australia, Rio Tinto, BHP Billiton and Fortescue Metals Group, are all pushing ahead with plans to ramp up production amid mixed signs over demand from Chinese steel mills.
"Despite some challenging weather conditions, our Pilbara 290 iron ore expansion remains on track to deliver first tonnes by the end of this quarter," Rio Tinto Chief Executive Sam Walsh said in a statement.
Benchmark 62 percent grade iron ore stood at $126.90 a tonne on Monday, its highest level in two months based on data from compiler Steel Index.
Total output, taking into account joint ventures, rose 7 percent to 66 million tonnes in the three months to the end of June versus a year ago, data released in Rio Tinto's second-quarter production report showed.
Shipments, however, rose just 1 percent over the period to 61 million tonnes due to a temporary breakdown of a conveyor system at a loading dock.
Iron ore generates about two-thirds of the company's revenue. Copper is the next biggest revenue generator.
Heavy rains drenched large tracts of Australia's iron ore-rich Pilbara region in June, with some part experiencing its wettest June in more than 70 years, according to weather data.
BHP Billiton is also expected to post a slowdown in quarterly iron ore production gains on Wednesday due to the rains, offset to some degree by its own expansion work.
The unexpected drenching has already led Fortescue to warn of a 2-million-tonne drop in its 2012-2013 production guidance.
Rio Tinto also said a faster-than-expected recovery was underway at its Bingham Canyon copper mine in the United States after a landslide, with projected full-year mined and refined copper yields improving by 25,000 tonnes over previous estimates.