Rio Tinto says China slowdown quickening

Rio's share price has fallen 45pc this year as concerns grow that a recession will hurt demand for commodities but Mr Albanese said at a visit to a $1bn (¡ê630m) ilmenite mine project in Madagascar that his company would not be forced into the arms of BHP Billiton, which is targeting a $86bn takeover of the Anglo-Australian group.

Mr Albanese said China was "taking a pause for breath" and there were further signs of the economy slowing down in the fourth quarter following its slowest growth in five years in the three months to the end of September. However, he said it was still realistic to expect growth of 8pc or 9pc from China next year.

Rio counts China as a major customer and the country's state-owned aluminium producer, Chinalco, is the company's largest shareholder with a 12pc stake, although last month Chinalco found that its shareholding in Rio Tinto had been frozen because it was held in a custodian account by failed investment bank Lehman Brothers.

In addition to concerns about falling demand, metal and oil prices have fallen sharply in the last few weeks as the crisis in global financial markets spreads fear into the real economy ¨C but Mr Albanese said Rio was "ready to act" if the decline in prices continued.

However, he said this would not necessarily include seeking a deal with BHP Billiton, adding: "Our response to the BHP bid does not change."

BHP has been seeking a deal with Rio since the beginning of this year but the European Commission is expected to file a Statement of Objections to the deal this month raising concerns over the combined company's control of the iron ore market.

Mr Albanese said that he expected the long-term demand picture for coal, steel and other commodities to remain unchanged, even though the financial crisis was likely to cause a decline through 2009.

Rio shares rose 36p to ¡ê29.

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