Higher demand from China boosted the iron ore production of mining giant Rio Tinto (ASX: RIO) in the third quarter. The company produced 53.4 million metric tonnes of iron ore compared to 52.6 million metric tonnes for the same quarter in 2012.

The Q3 data is also higher than the 53.3 million metric tonnes median estimate of five analysts whom Bloomberg surveyed.

China, the biggest buyer of Rio's iron ore, showed signs of recovery in Q3 after suffering from slow down the past two quarters. Following the higher demand for iron ore, the key ingredient in making steel, Australia raised its price estimate on the commodity on buying from Chinese steel mills.

China also increased its copper imports to an 18-month high.

Coupled with the higher production of iron ore is Rio cutting $5 billion in costs until the end of 2013, causing its share prices to go up 2.5 per cent to A$63.20 in trading at Sydney.

Rio Chief Executive Sam Walsh said in a statement, "In iron ore, we achieved record production and shipments in Western Australia ... We are also making further important gains in productivity across our operations and continue to drive costs out of the business."

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The higher output is timed with Rio expanding its production target to 360 million tonnes of iron ore from 290 million tonnes in the Pilbara region. Rio is also evaluating different options for the expansion worth $5 billion.

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