Rio Tinto Ltd/Plc's first-quarter aluminum output fell a steeper-than- expected 6 percent and iron ore production fell 15 percent as the firm struggled to balance supply with weak global demand.

Copper output rose 33 percent, while Rio hoped to see a demand revival for iron ore in the second half of the year on the back of a recovery in China, expectations of which have already sent copper prices surging 50 percent this year.

We were expecting it to be soft but it was softer than we thought, UBS mining analyst Glyn Lawcock said.

Obviously some of the curtailments that they have announced have come through quite quickly so all divisions were a little bit weaker than we thought except for copper and iron ore, he said.

Alumina production fell 2 percent to 2.18 million tons and bauxite fell 19 percent to 6.97 million tons.

The aluminum supply cuts did little to bolster depressed prices, which have hovered around five-year lows since late last year as demand wanes for the lightweight metal, used in everything from jets to beer cans.

Over the quarter, a steady performance at Rio's Canadian smelters was outweighed by production cutbacks in operations in Europe and at a smelter in New Zealand, the company said.

Rio Chief Executive Tom Albanese said the timing for any economic recovery was unknown, though he held out hope that China's steel mills at least -- big buyers of the company's iron ore -- could see improvements later this year.

This was keeping intact Rio's plans to boost iron ore output to 200 million tons, from 175 million last year, Albanese said. The 31.6 million tons of output in the first quarter was flat from the previous quarter, after Rio cut iron ore output late last year in the face of falling demand.

Global iron ore guidance for 2009 remains around 200 million tons, with an expected recovery in Chinese steel demand in the second half of 2009, Albanese said in a statement.

Rio supplies more iron ore to China than close rival BHP Billiton Ltd/Plc , which reports its quarterly production on April 22. Both companies are locked in 2009 price negotiations with the mills.

DJ Carmichael & Co mining analyst James Wilson expects Rio to accept a 25-30 percent price drop from the mills.

Our estimate is based on the fact that Chinese internal iron ore production is a certain cost and difference between that and the current price is about 29 percent, he said.

Richer ore grades at the company's Kennecott and Escondida mines boosted refined copper production to 104,300 tons while mined copper rose 9 percent to 196,000 tons thanks to improvements at Kennecott and the Grasberg mine in Indonesia.

Rio's shares briefly reversed early gains and turned negative after the report, but recovered to close up 1 percent at A$57.35.

For a graphic of recent production, see:

http://graphics.thomsonreuters.com/apr09/AU_RIOPRDQ109.jpg

Rio Tinto, the world's top aluminum maker since 2007 after buying Canada's Alcan in November 2007, has proposed selling minority asset stakes and more equity to state-owned Chinese aluminum group Chinalco -- already its biggest shareholder -- to raise $19.5 billion to help cover a punishing debt load.

Rio, which mines a range of metals and minerals from aluminum and copper to gold and diamonds, has been under pressure to cut borrowings since its share price slumped after BHP scrapped a $66 billion takeover bid for the company in November.

It took on heavy debt when it paid $38 billion to buy Alcan.

Since the acquisition, aluminum prices have dropped more than $1,000 to around $1,500 a ton.

Over the quarter, a steady performance at the Canadian smelters was outweighed by production cutbacks in operations in Europe and at a smelter in New Zealand, the company said.

First quarter iron ore shipments from the company's main Pilbara mines were slowed by 9 percent due to flooding in the region over the period, which is the height of the cyclone season, the company said.

(Additional reporting by Bruce Hextall; Editing by Sambit Mohanty)

China