(Adds nickel, pellet production)
RIO DE JANEIRO, Feb 16 (Reuters) - Brazilian miner Vale said on Friday that total iron ore output reached a record of 366.5 million tonnes last year, boosted by record high production from its so-called northern system, even as iron ore sales slipped slightly from 2016.
The northern system, composed of its Carajás, Serra Leste and its massive S11D mine, boasted output of 169.2 million tonnes of iron ore, the world's top iron ore producer said, reiterating guidance of 390 million tonnes for this year.
But iron ore sales slid 0.7 percent over 2016, even as Chinese steel mills chased top quality iron ore - produced by Vale and Australian rivals Rio Tinto PLC and BHP Billiton Ltd - to supercharge output and meet Beijing's tougher environmental standards.
Vale, also the world's top nickel producer, said nickel production slid 7.3 percent to 288,200 tonnes, due to Vale's "commitment to maximizing cash generation," the company said.
Facing oversupply, nickel prices have yet to take off, despite the metal's status as a key input for the lithium-ion batteries that power electric vehicles, along with lithium and cobalt.
In December, Vale dialed back its nickel output forecasts for the next five years and said it continued to seek an investor for its New Caledonia nickel mine, located on a Pacific island.
Vale said pellet production last year reached 50.3 million tonnes, 4.1 percent above 2016. (Reporting by Alexandra Alper and Marta Nogueira; Editing by Daniel Flynn and Bernadette Baum)