Rio Chief Albanese Says Slowdown in China Is Gathering Pace

Rio Tinto Group Chief Executive Officer Tom Albanese said the economic slowdown in China, the world's largest user of metals, is quickening and demand won't rebound until 2009.

Rio is among mining companies reviewing investment plans after commodity prices plunged amid signs of a global economic slowdown. The London-based company, fending off a $76.8 billion hostile bid from BHP Billiton Ltd., is planning to spend more than $9 billion on new mines and expansions next year.

``We want to tailor our expected delivery of those projects with when we see demand picking up,'' Albanese said. ``We'll prioritize spending towards the most robust projects.''

Chinese Contraction

China accounted for 17 percent of Rio's sales in the first half. It's economy grew at the slowest pace in five years in the three months through September, the fifth straight quarter that the expansion has cooled.

Sliding aluminum prices have led to about 1.6 million metric tons of global smelting capacity being idled, and another 700,000 tons may follow, Albanese said. ``Prices at these levels are having definitive supply effects,'' he said.

Rio is reviewing the costs of its joint venture with Saudi Arabia's state-owned mining company Ma'aden to build a $10.5 billion aluminum smelter complex.

``We have rapid capital and construction costs escalation,'' Albanese said. ``This is an opportunity to test those assumptions of escalation and see if we can start bringing down the cost of these new projects.''

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