Rio Tinto meets 2014 iron ore target, aluminium brightens

* Rio Tinto (Xetra: 855018 - news) iron ore output rises 12 pct in Q4

* Meets 2014 guidance of 295 million tonnes

* Aluminium makes greater 2014 contribution (Adds production data, CEO quote, price forecast)

By James Regan

SYDNEY, Jan 20 (Reuters) - Rio Tinto reported a sharp rise in quarterly iron ore output on Tuesday amid a drive to corner a greater share of the world market, and reported price gains at its long-pilloried aluminium division.

The world's no. 2 producer after Vale lifted iron ore production 12 percent in the fourth quarter from a year earlier, to 79.1 million tonnes, meeting full-year guidance of 295 million tonnes.

Iron ore accounts for 90 percent of Rio Tinto's earnings and the higher tonnage is seen as a step in shoring up its balance sheet ahead of a promise of sharply increased returns to shareholders, starting with its annual results in February.

Analysts expect Rio to spend up to $4 billion buying its own shares as part of the strategy to boost returns.

"We have had a successful year of production, capped off with a robust fourth quarter," Chief Executive Sam Walsh said in a statement. "Output is in line with our targets across all of our major products."

Mega miners such as Rio, Brazil's Vale and BHP Billiton have been ramping up iron ore output, despite concerns of an oversupply that cut prices 47 percent in 2014.

Their strategy to take market share from high-cost Chinese miners has so far met with only limited success, with the highest estimates suggesting less than a fifth of the roughly 500 million tonnes mined each year in China has come off line.

In aluminium, Rio has been steadily recovering from a disastrous $38 billion acquisition of Alcan in 2007 that brought it close to bankruptcy and helped lead to the dismissal of its previous chief executive, Tom Albanese.

Net earnings from the division went from $54 million in 2012 to $557 million in 2013 and could be higher for 2014, given a 6.5 percent price rise in 2014.

Rio reported only a 1 percent decline in 2014 output of the lightweight metal to 3.36 million tonnes, suggesting a greater contribution to 2014 profits.

Close rival Alcoa (NYSE: AA - news) last week delivered its strongest operating result since 2008.

Rio releases its 2014 financial results on Feb 12, with analysts tipping a near 10 percent drop in profit to around $9 billion, reflecting the slump in the iron ore price .

It said it sold its ore for an average price of $84.30 per tonne in 2014, well above current world market prices of $67.89 a tonne. Citi has cuts its 2015 iron ore price forecast to $58 a tonne from $65.

(Editing by Richard Pullin)