Rio to cut Australia iron ore output

SYDNEY (Reuters) - Rio Tinto (RIO.AX)(RIO.L) will cut its 2008 iron ore shipments from Australia 10 percent to between 170 million and 175 million tonnes due to weakening demand from China, the company said on Monday.

The reduction by the world's second-largest iron ore miner reduces output by up to 20 million tonnes from its previously targeted output of around 190 million tonnes in 2008.

"Operations continue to perform well but demand has continued to decelerate," Rio Chief Executive Tom Albanese said in a statement.

The reduction was prudent in order to align production with revised requirements by its customers in light of a drop in Chinese demand in the fourth quarter, Albanese said.

"We believe this will be a short sharp slowdown in China, with demand rebounding over the course of 2009 as the fundamentals of Chinese economic growth remain sound," Albanese said.

A spokesman for BHP Billiton (BHP.AX), Rio's main rival in Australia's Pilbara iron ore belt, had no immediate comment on BHP's operations.

With the Rio cuts, BHP remains the only large iron ore miner not to initiate production cuts this year in the face of sagging demand for ore from steelmakers.

Brazil's Vale (VALE5.SA) RIO.N, the world's largest iron ore miner, announced on October 31 it would cut its iron ore output by 30 million tonnes a year from November.

Steel prices have collapsed in recent months along with demand as the global financial crisis strangled growth prospects and developed economies faced what some say could be their first full-year recession since World War II.