Rio Tinto Plc, the worlds second-largest mining company, said on Tuesday it had increased its global iron ore shipments by 17% during the past year.
Rio Tinto said it had sold 302.6 million tons of iron ore during 2014, including the 11% increase in output to 295 million tons through the year.
“We have had a successful year of production, capped off with a robust fourth quarter. Output is in line with our targets across all of our major products,” said Chief Executive Sam Walsh.
Mr. Walsh also added that the current market conditions remain challenging for the Anglo-Australian company. Rio Tinto is the first miner to report its yearly performance amid plunging commodity prices, including iron ore, on which Rio Tinto is highly dependent.
Iron ore prices have fallen from $140 a ton to around $70 a ton during 2014 due to a jump in supply. Rio Tinto projected for 2015 it would mine 330 million tons of iron ore, while Vale, the largest exporter, projected it would lift its output to 340 million tons.
Rio Tintos record sales would help support the boards intentions to increase shareholder returns. The board needs to win the investors favor ahead of another offer from Glencore.
Last July, Rio Tinto was approached by its fellow miner with a merger offer, which was rebuffed. Under UK stock market regulations, Glencore is obligated to wait a set amount of time before launching a new offer. In line with those rules the Anglo–Swiss company could not propose another agreement untill April.
Despite the decline in iron ore prices, Rio Tinto said it would still manage to deliver lifted shareholder returns next month when the company is scheduled to report its financial performance.
The miner also said it would slash capital expenditure for 2015 to less than $8.5 billion, outlining the companys aim to further reduce costs.
Rio Tinto spent $765 million for exploration and evaluation during 2014, down from the $948 million reported a year earlier.
Earlier this month UBS reduced its iron ore price projection by 22% to $66 a ton, citing oversupply concerns. The news may prove troubling for Rio Tinto as iron ore accounted for around 90% of its overall earnings in recent years.
“Rio Tinto remains focused on operating and commercial excellence to leverage our low-cost position and maximise value for shareholders,” Mr. Walsh said.
Rio Tinto Plc lost 1.13% on Monday and closed at GBX 2 856 in London. On Tuesday the stock edged up 0.65% to GBX 2 875 at 14:04 GMT, marking a one-year decrease of 13.86%. The company is valued at 53.33 billion.
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