Questor share tip: Rio Tinto well placed as iron ore prices remain high However, March data was much stronger. China's National Bureau of Statistics reported steel production hit a record 61.58m tonnes. There are also falling iron ore inventories at ports and production of iron ore by the mining majors fell in the first quarter. Indeed, Rio's own production fell 9pc in the first quarter because of bad weather impacting its operations. However, because there are a lot of expansion projects going on in the mining sector, investors are concerned about the long-term sustainability of prices. All the majors are expanding their operations and West African production should take off in the next few years. Despite this, iron ore prices are expected to remain high over the medium term, so for an investor the impact of higher long-term prices partially offsets the impact of lower near-term prices. Simandou diversifies Rio's geographical footprint in iron ore away from Australia. This is positive because of rising costs caused by the strong Australian dollar. Rio's $55bn investment programme also involves diversifying away from iron ore e_SEnD which is a positive thing. As any investor knows, it is not sensible to have all your eggs in one basket. The other two major expansion projects are the 34pc-owned Oyu Tolgoi gold and copper projects in Mongolia and the expansion of its coking coal operations in Mozambique after the acquisition of Riversdale Mining. Questor feels that sentiment has got ahead of itself in the sector - and is pricing in more gloom than it should. Urbanisation in China and India will continue for many years to come. Indeed, analysts have been looking at their Rio forecasts since its recent production reports and have come up with some pretty punchy price targets. Deutsche Bank has a 12-month target of £54.10 on the shares and Standard & Poor's Equity Research has a £51 objective, although the average target of the 20 City analysts monitored by Bloomberg is £46.35. The shares were last tipped in March at £33.86½ and are up 3pc since then, compared with a FTSE 100 down 2pc. The valuation looks too cheap and the shares are a buy.