Russia's biggest iron ore miner, Metalloinvest, reported Wednesday a 7% increase in iron ore production to 20.2 million mt in the first half of 2011, helped by mining efficiency and optimization at operations in western Russia as export demand rose.

Third-party shipments rose by 26% over the same period, the privately held mining and steel company said in an operations update, without disclosing a figure.

Pellet production at 11.2 million mt and shipment volumes at 6.9 million mt were "stable" in the first half compared with the year-earlier period, the statement said.

Hot briquetted iron and direct-reduced iron production rose 10% to 2.6 million mt while shipments rose 18% to 1.2 million mt.

Iron ore, pellets and HBI exports increased up to 76% in consolidated shipments of the three product types, it said, which Platts calculates at around 11 million mt.

China was the largest consumer of iron ore, pellets and HBI accounting for 5.7 million mt of products, or 52% of the total export volumes, the company added. It supplies customers in the Middle East, as well as Eastern and Western Europe.

Metalloinvest's crude steel production in the period fell by 3.3% to 2.9 million mt, which the group said was a result of an increasing share of high-value added products in the product mix. Steel product shipments fell 4% to 2.6 million mt.

"Results for the first half of 2011 reinstated our strategy aimed at increasing production volumes and growing a share of value-added products in our product mix," said Metalloinvest CEO Eduard Potapov in the statement.

"Russia remains our key market, and we continue developing our long-term relationships with the largest local customers. At the same time, Metalloinvest actively works towards expanding its customer base and delivers products to a broad range of geographical regions."

Russian steelmaker Magnitogorsk Iron & Steel Works (MMK) and Metalloinvest last week said they signed an iron ore supply agreement valid for up to three years for material from the Mikhailovsky Mining and Processing Plant (GOK).

Mikhailovsky GOK in western Russia's Kursk region is the second-largest iron ore production facility by output in Russia, accounting for about 15.3 million mt of concentrate and 9.7 million mt of pellets in 2010, Metalloinvest says on its website.

The company also owns Russia's biggest iron ore processing facility of Lebedinsky GOK in nearby Belgorod.

Metalloinvest's other main units Oskol Elektrometallurgical plant and Ural Steel produce steel billets and other steel types for domestic and export markets. Group revenues in 2010 totaled $7.23 billion.

Metalloinvest said in February it planned to raise iron ore concentrate output by 9.7% to 38.5 million mt in 2011 compared with volumes in 2010 as part of a longer-term plan to reach almost 50 million mt/year of output in 2016-2020.