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Rio Tinto hits 2016 iron ore guidance, 2017 target intact

Signage for Rio Tinto is displayed atop the company's offices in the central business district of Perth, Australia, on Friday, Oct. 28, 2016.
Brendon Thorne | Bloomberg | Getty Images
Signage for Rio Tinto is displayed atop the company's offices in the central business district of Perth, Australia, on Friday, Oct. 28, 2016.

Global miner Rio Tinto hit its mid-point target for iron ore shipments from Australia in 2016 and kept its guidance of 330 million-340 million tonnes for this year intact.

The world's second-biggest supplier of the steel-making raw material shipped 327.6 million tonnes in 2016 against guidance of 325 million-330 million tonnes, it said.

Guidance for shipments of 330 million-340 million tonnes in 2017 was unchanged.

"Sales in the (fourth) quarter exceeded production by 2.2 million tonnes, primarily drawing down on inventories built at the ports in the third quarter due to maintenance," Rio said in a statement.

Fourth quarter iron ore shipments climbed by 1 percent to 87.7 million tonnes versus the year ago period, the company said.

Shipment levels are closely watched amid volatile global iron ore prices, with the 1.4 billion-tonne-per-year sea-traded market now in balance but threatened by a looming supply glut.

Analysts expect Australia's other major producers, BHP Billiton and Fortescue Metals Group, to report near-record quarterly production figures later this month.

The price of iron ore unexpectedly surged in 2016 by about 80 percent, fueled by strong demand in China, but forecasters expect a steep decline in the price this year to less than $60 a tonne.

The company also said its mined copper production, a key growth business, was 4 percent higher than 2015 at 523,000 tonnes, though still below full year guidance. It cited the absence of copper delivered from its Grasberg mine in Indonesia and lower than expected production at its Kennecott mine in the United States for the shortfall.

Through a joint venture agreement with Freeport-McMoRan, Rio is entitled to 40 percent of material mined only above an agreed threshold.

The company set 2017 aluminium production guidance at between 3.5 million to 3.7 million tonnes, little changed on the 3.6 million tonnes produced in 2016.

Rio Chief Executive Jean-Sebastien Jacques said 2016's overall production performance was "strong" and based on cost efficiencies and maximized cash flow.

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