Mining giant Rio Tinto on Tuesday reported surging iron ore production in 2015 and set higher targets for the new year, but still fell just short of expectations.

 

With ore prices tumbling, Rio has bolstered output and set a production target of 350 million tonnes for 2016.

Last year's production came in at 327.6 million tonnes, up 11 percent on 2014, boosted by expansion in Western Australia's Pilbara region and a rundown of stockpiles.

Although the fourth quarter saw output jump 10 percent over the same period in 2014 to 87.2 million tonnes, analysts expected 91 million tonnes.

Iron ore shipments for 2015 reached 336.6 million tonnes, also 11 percent up, but below the company's revised guidance of 340 million tonnes.

"Against a challenging market backdrop for the industry, Rio Tinto remains focused on operating and commercial excellence to leverage the low-cost position," of its iron ore mines, said chief executive Sam Walsh.

"In 2015, we delivered efficient production, meeting our targets across all of our major products, while rigorously controlling our cost base.

"We will continue to focus on disciplined management of costs and capital to maximise cash flow generation throughout 2016."

Walsh last month vowed to keep slashing spending in a bid to maintain profits in the face of the commodities rout on oversupplied markets.

He has defended Rio's continued expansion of iron ore output saying Australia could not control market prices.

Critics say large miners such as Rio and rival BHP Billiton are raising output despite plunging prices to try to flood the market and drive smaller competitors out of business.

The price of iron ore has dropped from a peak close to $200 in 2011 to around $40. But it saw a 3.8 percent bounce overnight to $42.66a tonne on reports of Chinese stockpiling.