Rio Tinto says Madagascar power-sharing is positive

* Mining group reassured by power-sharing deal

* On target to produce 750,000 tonnes a year by 2012

By Richard Lough

ANTANANARIVO, Aug 12 (Reuters) - A subsidiary of UK-based Rio Tinto (RIO.AX) (RIO.L) said on Wednesday it felt reassured after Madagascar's political rivals struck a power-sharing deal last weekend to end months of turmoil.

The crisis that erupted earlier this year alarmed foreign investors at a time when the global economic downturn and plummeting commodity prices were already forcing some to review their business plans and find new funding.

"This is a positive move. Stability is always important for the company to reach our targets," QMM's director of communications Daniel Andriamanjaka told Reuters.

He said the firm had invested some $940 million to date in the ilmenite project, which began production this January.

Rio Tinto Iron & Titanium, part of the world's fourth-largest diversified mining group, owns 80 percent of the QMM mineral sands operation in Madagascar's southeastern corner. The Indian Ocean island's government owns the rest.

Andry Rajoelina, who used military support to topple former president Marc Ravalomanana in March, has threatened to revise existing contracts with major foreign companies investing in Madagascar's mineral and nascent oil sectors.

"We haven't yet been officially notified of any review of contract to date," Andriamanjaka said.

The company denied being behind schedule on an earlier target to produce around 300,000 tonnes a year for the first two years before hitting an annual rate of 750,000 tonnes in 2012.

"We're on track, on time," he said, but declined to say how much had been produced in the first seven months of the year.

"We intend to double production in 2010. Phase one will reach full speed by 2012, if we are optimists," he said.

So far, one shipment has been exported to its Quebec-based Sorel-Tracy processing facility. Ilmenite is used in the manufacture of pigments for the paint and plastics industries.

Madagascar ilmenite is 60 percent titanium oxide, according to QMM, making it higher quality than most other global sources.

Adrianamjaka said the global ilmenite had fluctuated between $50 and $120 since the outset of the global downturn.

Later phases planned at two further sites are expected to bring production to 2.2 million tonnes a year. (Editing by Daniel Wallis)