Rio Tinto to ship more iron ore in 2016 despite price rout

* Iron ore shipments to rise to 350 mln tonnes in 2016

* Rio to raise copper output at least 14 pct in 2016

* Rio flags flat coal output in 2016 (Adds production forecasts)

By Sonali Paul

MELBOURNE, Jan 19 (Reuters) - Global miner Rio Tinto (LSE: RIO.L - news) plans to increase iron ore production and shipments in 2016, defying a collapse in prices as it takes advantage of its position as the world's lowest cost producer.

The world no.2 iron ore producer reported an 11 percent rise in annual iron ore shipments on Tuesday, roughly in line with its guidance of 340 million tonnes, and said it expected to produce and ship 350 million tonnes in 2016, including its mine co-owners' volumes.

Rio's strong output, low costs and sharp cuts in capital spending are expected to help it maintain or raise its dividend at least for the next 12 months, in stark contrast to its rivals, even with commodities prices mired at multi-year lows.

"We will continue to focus on disciplined management of costs and capital to maximise cash flow generation throughout 2016," Rio Tinto Chief Executive Sam Walsh said in a statement.

The company has frozen all staff pay in 2016 and is slashing travel spending, stepping up a three-year cost-cutting effort to ride out a prolonged commodities slump. Walsh warned staff last week the outlook was "very sobering."

Iron ore shipments in the fourth quarter rose 10 percent on a year earlier to 91.3 million tonnes, including its co-owners' volumes, and again outpaced quarterly production as Rio Tinto ran down stockpiles.

Rio Tinto confirmed analysts' view that it would have to step up output in 2016 to keep up shipments.

It (Other OTC: ITGL - news) said it expects to produce and ship around 350 million tonnes of iron ore, including co-owners' volumes, implying a 7 percent increase in production and 4 percent rise in shipments.

Rio Tinto expects its share of mined copper production to rise to between 575,000 and 625,000 tonnes in 2016 from 504,000 tonnes last year, boosted by higher output from the Kennecott mine in the United States and an expected share of output from Freeport McMoRan (Swiss: FCX.SW - news) 's Grasberg mine in Indonesia.

Mined copper output fell 13 percent to 111,000 tonnes in the fourth quarter of 2015, well below a Goldman Sachs (NYSE: GS-PB - news) forecast of 140,000 tonnes, mainly as there was less metal per tonne of rock dug at the Escondida mine in Chile, co-owned by BHP Billiton (NYSE: BBL - news) .

Like its peers, Rio Tinto stepped up metallurgical coal production to offset sliding prices in 2015, however it flagged that volumes would be flat in 2016. The company is trying to sell its coal operations in Australia's Hunter Valley.

(Reporting by Sonali Paul; Editing by Richard Balmforth and Chris Reese)