* Mid-decade plan to mine 255 mln/t per year to hinge on market conditions
* Appoints former Australian ambassador to China to board
* No impact yet on orders as key market China tightens credit (Adds details, quotes, share price)
By James Regan
SYDNEY, Aug 19 (Reuters) - Australia's Fortescue Metals Group said on Friday its 2010/11 net profit surged 76 percent to $1.02 billion driven by higher iron ore prices.
But Australia's No.3 iron ore producer warned that credit tightening in China, its main market, was moderating demand though it had yet to see any impact on orders.
"There's no questioning that the tightening of credit in China has started to moderate demand in a small way," Fortescue's chief executive, Nev Power, told reporters.
In early July, China's central bank raised interest rates for the third time this year to slow borrowing in a bid to cool inflation.
Power said Fortescue's order book remained intact and that no customers had requested shipments be cancelled or deferred.
In 2008 as the global financial crisis took hold, some steel mills deferred or cancelled orders to iron ore miners, causing a supply overhang and sending prices lower.
But since 2009, the price of iron ore has risen more in percentage terms than gold and oil, owing in large part to continued strong demand from Chinese steel mills.
Iron ore sales are expected to be the main contributor to hefty profits expected to be reported by rival BHP Billiton on Aug. 24.
Out of a forecast $31.947 billion in earnings before interest and tax, Citi Global Markets expects $13.52 billion to come from BHP's iron ore division, more than twice that of base metals, its second-best performing division.
China, the world's largest iron ore consumer, imported 618 million tonnes of iron ore last year. Most of that was supplied by BHP Billiton Rio Tinto , Vale and Fortescue.
Fortescue's profit was broadly in line with analysts' expectations. Revenue in the year to June 30 rose to $5.4 billion, from $3.2 billion for the prior financial year, the company said.
The gains were driven by sales of ore at an average $149 a tonne in 2010/11, against $80 the previous year, with the company showing only a slight rise in shipments to 40 million tonnes versus 38 million.
Fortescue and most other iron ore miners in Australia have increased production to meet strong Asian demand. Rio Tinto, Australia's biggest iron ore producer, is spending $14.8 billion to fill a supply gap and this year expects to mine more than 240 million tonnes.
BHP Billiton is also spending billions of dollars to increase output.
Fortescue has brought forward by a year its original 2014 expansion target of mining 155 million tonnes to increase sales. Its current production rate is 55 million tonnes annualised, according to Power.
The next step to lift output to 255 million tonnes a year in 2015/16 would hinge on market conditions closer to the date, he said.
Commodities research group Wood-Mackenzie believes it will be at least five years before iron ore prices abate due to strong demand and limited supply increases.
Geoff Raby, a former Australian ambassador to China will join the board as a non-executive independent director, the company also announced.
Fortescue's chairman, Andrew Forrest, said in a statement that Raby's skills in international trade, particularly in relation to China, would complement the experience on the Perth-based company's board.
Shares of Fortescue, which declared a final divided of 4 Australian cents, bringing the total payout for the year to 7 Australian cents, were down 4 percent to A$5.81 at 0403 GMT, slightly outpacing losses in the wider Australian market .