By Nathan Richardson

January 16, 2018 - Australia-listed mining giant Rio Tinto saw record iron ore shipments and increased hard coking coal production in the October-December quarter, and has maintained its 2018 guidance for both, the company said Tuesday.

"The business performed well in the fourth quarter, and we finished the year in line with guidance across all major products," Rio Tinto CEO J-S Jacques said.

"We shipped 90 million mt of iron ore from our world-class Pilbara assets, a record quarter which demonstrates the system's growing flexibility," he said.

The 90 million mt figure topped shipment volumes from a year earlier by 3% and beat the July-September quarter by 5%.

Rio credited the increase to improvements in the rail network, along with increased flexibility across the infrastructure system.

The fourth quarter performance brought Rio's total 2017 iron ore shipments to 330.1 million mt, up 1% year on year and inline with its guidance of 330 million mt. For 2018, it has maintained its guidance at 330 million-340 million mt.

The guidance partly reflects continued rail maintenance required in 2018, it added.

The company reports its iron ore shipments on a 100% basis. It did not reveal Rio's share of iron ore shipments. Total iron ore production from its assets stood at 87.9 million mt in the December quarter, with Rio's share totaling 72.9 million mt.

About 17% of Rio's iron ore sales last year were priced with reference to the prior quarter's average index lagged by one month, with the remainder sold either on the current quarter average, current month average or fixed on the spot market. Approximately 67% were made on a cost and freight basis with the remainder sold free on board.

Achieved average pricing for the year was $59.6/wet mt on an FOB basis, which is equivalent to $64.8/dry mt, Rio said.

Rio's iron ore assets in Australia's Pilbara region include an integrated network of 15 mines, four port facilities, a 1,700 km rail network and related infrastructure.

Hard Coking Coal Production Up In October-December

Rio's share of hard coking coal production from its assets was 2.32 million mt in the December quarter, up 6% year on year and 3% quarter on quarter, the company said.

The increase was driven by strong operational performances at its two remaining coal mines, the Queensland-based Kestrel and Hail Creek mines, it said.

Despite the increase in production late in the year, the company's total hard coking coal output for the year fell 5% to 7.70 million mt due to the impact of Tropical Cyclone Debbie, which hit in late March, it said. The total was in the upper end of Rio's 2017 guidance of 7.2 million-7.8 million mt. It has maintained its hard coking coal guidance for 2018 at 7.5 million-8.5 million mt.

Rio's hard coking coal prices achieved in the second half of 2017 averaged $164/mt on an FOB basis, compared to $177/mt in the first half of the year, it said.

Meanwhile, the miner produced no semi-soft coking coal in the October-December period due to the sale of its Coal & Allied business to Yancoal in September. Its total semi-soft coking coal production for the year was 2.02 million mt, down 51% from a year earlier.

IOC Production Unchanged on Year

Rio's Iron Ore Company of Canada business saw production of iron ore pellets and concentrate in the December quarter unchanged year on year at 2.7 million mt, but down 14% from the previous quarter.

Total IOC pellet production finished 2017 at 10.5 million mt, up 7% year on year with pellet demand continuing to be strong and product mix being optimized to meet customer demand, Rio said. Rio's share was 6.1 million mt.

IOC's concentrate production for sale in 2017 of 8.5 million mt was up 2% from 2016. Rio's share was 5 million mt.

Rio's 2017 share of IOC's total pellet and concentrate production of 11.2 million mt fell short of its previously given guidance of 11.4 million-12.4 million mt, while it has maintained its 2018 guidance at 11.5 million-12.5 million mt.