It was largely driven by increased production at the Kestrel mine where the coal handling preparation plant had been shut for upgrade works in the first half of 2013 as the first half of the extension project was completed later that year.

Semi-soft coking coal production was 16% lower than the first half of 2013, which reflected changes in the projection mix to maximise higher margin thermal coal.

Australian thermal coal production grew 6% compared with the 2013 first-half due to productivity gains in the Hunter Valley and additional volumes produced from a processing plant by-product stream at Hail Creek.

First-half production in Mozambique was affected by rail and port constraints, as well as stoppages and operational changes in response to security conditions in the first quarter.

On July 30, Rio Tinto announced it was selling its Benga coal mine and other projects in the Tete province of Mozambique for $US50 million ($A54 million).

Rio Tinto expects its share of thermal coal production to be 17.5 million tonnes for the full 2014 year. That excludes 2.5Mt of production from the Clermont mine prior to the divestment.

Rio Tinto’s share of production of Australian hard and semi-soft coking coal is expected to be 7.4Mt and 3Mt respectively.

Company-wide, Rio Tinto reported a 21% increase in first-half underlying earnings of $5.1 billion.

The company managed to achieve $3.2 billion of sustainable operating cash cost improvements since 2012, exceeding the $3 billion reduction target six months ahead of schedule.

Momentum in cost reductions is expected to realise a further $1 billion of savings by the end of 2015.

The company cut its capital expenditure to $3.6 billion in the first half and for the full year capex is expected to be about $9 billion – about $2 billion shy of previous guidance.

Capex for 2015 is expected to be about $8 billion.

Rio Tinto chief executive Sam Walsh said the company’s half-year performance reflected the quality of “world class assets, our program of operational excellence and our ability to drive performance during a period of weaker prices”

“These results show that our current strategic and management focus is making a meaningful contribution to cashflow generation,” he said.

“During the first half we have increased underlying earnings by 21% to $5.1 billion and enhanced operating cash flow by 8%.

“We have delivered what we said we would, exceeding our $3 billion operating cost reduction target six months ahead of schedule while producing record volumes and driving productivity improvements across all our businesses.”

Walsh said Rio Tinto had decreased its net debt by $6 billion compared with this time last year.

This was thanks to its stronger operating cash flows, sharply reduced capital spend and proceeds from divestments.

“We are confident Rio Tinto’s low cost, diversified portfolio will continue to generate strong and sustainable cash flows over the coming years,” Walsh said.

He said it would result in materially increased cash returns to shareholders.