Iron ore miners are ramping up production to meet booming demand from Asia, with most of the growth in output set to come from Australia where two of the world's biggest producers, Rio Tinto and BHP Billiton, dominate.

Rio Tinto's move to boost output by 28 percent follows this week's demise of a planned joint venture with BHP Billiton in northwest Australia's Pilbara region aimed at saving the companies $10 billion in costs.

"Rio and BHP are obviously not taking much notice of the mining tax if they are planning all these investments in iron ore," said an analyst in Perth, who asked not to be named because he is not authorized to speak to media.

BHP Billiton unveiled a 6 percent rise in quarterly iron ore output on Wednesday and is planning to expand Australian iron ore operations to meet booming Asian demand.

Rio Tinto's announcement, combined with BHP Billiton's production surge, eclipsed news reports on Wednesday that suggested they and other miners risked being double-taxed under Australia's proposed 30 percent tax on iron ore and coal.

Rio Tinto, BHP Billiton and London-listed Xstrata - the big three of Australian iron ore and coal - accuse Canberra of reneging on a guarantee to refund all of the money the miners pay state governments in the form of royalties, newspapers said.

Without that guarantee, they could effectively be double-taxed.

Rio Tinto and BHP declined to comment on the media reports.

But neither industry analysts nor political experts believe the issue will reignite the tax issue and hurt mining investment, pointing to Rio Tinto's expansion plan as evidence.

"They see the benefits of selling more iron ore outweighing the extra tax they will have to pay," the Perth analyst said.

Spot iron ore prices are near five-month highs, suggesting producers will see better sales margins. Most ore is sold on a quarterly system, based on the previous quarter's average price.

Rio's $3.1 billion plan would take its annual Australian production from 220 million tons to 283 million by 2013. It aims to eventually hit 333 million tons, which could bring it alongside Brazil's Vale, the world's top producer.

BHP Billiton is running at around 125 million tons a year, with near-term plans for 155 million tons.

The world's biggest miner, BHP Billiton said on Wednesday it is running most assets at capacity as suppliers struggle to keep pace with global appetite for industrial raw materials.

"Despite ongoing uncertainty in the developed world, BHP Billiton remains positive on prospects for many of its core commodities and the underlying performance of its business due to strength in emerging economies and the ongoing delay in the supply side response," the company said.

The surge in iron ore prices, up 75 percent over the past 12 months and buoyed by healthy demand from China, the world's biggest steel producer, also mirrors bright prospects for other steelmaking ingredients such as ferrochrome.

A $710 million expansion in ferrochrome, a key component in stainless steel, was unveiled by Xstrata on Wednesday.

Analysts said while Xstrata's plans to build a smelter in South Africa showed confidence in ferrochrome, a main driver was to cut costs as it was using a new, energy-efficient technology.

Mining shares recovered in London after falling on Tuesday on worries of a slowdown in Chinese demand after Beijing raised interest rates for the first time since 2007.

Many metals prices bounced, lifting Rio Tinto shares 1.7 percent to 4017 pence at 1200 GMT, largely in line with the British mining index. BHP Billiton shares gained 1.8 percent to 2177.5 pence and Xstrata climbed 2.1 percent to 1274.5 pence.

Rio Tinto said last week it produced a record 47.6 million tons of iron ore in the quarter and was similarly driving all its divisions near or above capacity to take advantage of an upsurge in minerals prices.

Both it and BHP Billiton threatened to pull investments in Australia when Canberra revealed its mining tax proposal in May, but struck a truce with the government in July when it agreed a tax of 30 percent rather than 40 percent, and narrowed its scope to iron ore and coal mines.