Chief executive Tom Albanese told the company’s investor day in London that it was uncertain when stimulus measures, particularly those announced in China, would start to impact conditions.

“Given this, and the considerable price fluctuations in recent times, we are somewhat more cautious on the outlook over the next few quarters,” he said.

“These are challenging times. We’re prepared. We won’t stand still.”

Rio does not expect China’s stimulus package to make an impact until the next year’s March leadership change.

As a result, the company has lowered its gross domestic product growth to below 8% for this year, in line with the International Monetary Fund’s revised projection of 7.8% ahead of expected growth of 8.2% next year.

Albanese said Chinese deceleration showed signs of bottoming out.

Iron ore prices slumped in August to below $US90 per tonne, but have been recovering, up to $110.40/t yesterday and to $117.20/t overnight.

Albanese said the company expected iron ore prices to remain volatile. But he suggested about 100 million tonnes of production – mainly in China – had become unprofitable and a large proportion had already been curtailed.

He added that project cancellations and deferrals by its peers improved the company’s positioning.

Rio said reductions in service and support costs had produced savings of $US500 million so far this year and it was planning further reductions, primarily in operating, evaluation and sustaining costs.

“We will get tougher on costs,” Albanese said.

“We aim to maintain our single A credit rating and are driving out cost reduction efforts harder and faster.”

During the first six months of the year, Rio charged just over $1 billion in pre-tax and pre-divestment exploration and evaluation expenditure to the profit and loss statement, more than double last year.

Around 40% was incurred by the copper group, 30% by the iron ore division, with the rest spread across energy, diamonds, minerals and aluminium.

Albanese said the company would be restraining new investment in alumina and aluminium.

Total approved expenditure on projects was expected to peak this year.

“I would not expect to see any new major capital approvals in the near-term,” Albanese said.

Meanwhile, the company planned to be more aggressive towards projects that weren’t considered “tier one”

Assets under review for divestment include the Palabora copper project, the Pacific Aluminium division and the diamonds business.