The supply-demand imbalance has seen iron ore price sink by more than two-thirds since peaking near $200 a tonne in 2011
Sydney - AFP
Mining giant Rio Tinto said on Tuesday it would slash forecast spending next year to maintain profits in the face of a commodity price rout.
Global commodity prices have plunged in recent months as growth slows in China, the world's second-largest economy. The situation has been worsened by a supply glut blamed on rising output by leading miners such as BHP Billiton and Rio.
The tumbling price of commodities, including iron ore -- Rio's main commodity -- has increased the pressure on mining firms as prices approach break-even costs.
Rio said in a statement that capital spending for 2016 was expected to be around $5 billion compared to previous forecasts of less than $6 billion.
The figure was anticipated to reach $5 billion this year in contrast to previous estimates of $5.5 billion, the Anglo-Australian miner said.
The price of iron ore tumbled to $39.60 Tuesday, a multi-year low, after peaking near $200 a tonne in 2011.
"Our prudent capital allocation and disciplined approach to the balance sheet have reinforced our resilience during this period of ongoing volatility," Rio Tinto chief executive Sam Walsh said in a statement.
"With all of our investment decisions framed by the need to deliver value for shareholders, we have remained focused on investing in only the best-quality projects."
Critics have said large miners such as BHP and Rio raise output despite falling prices to try to flood the market and drive smaller competitors out of business.