Nov. 3 (Bloomberg) -- Rio Tinto Group Chief Executive Officer Tom Albanese said the economic slowdown in China, where the company makes 17 percent of its sales, is quickening and demand won't rebound until 2009.

``It is decelerating more in the fourth quarter than we saw in the third quarter,'' Albanese said yesterday in an interview at the company's ilmenite mine in Madagascar. ``That is going to lead to a deferred pickup in cumulative demand for most of the things we produce during the course of 2009.''

The world's largest producers of aluminum, iron ore and steel are cutting output and reviewing investment plans. Rio, United Co. Rusal and Cia. Vale do Rio Doce are reining in their spending after commodity prices plunged amid signs of a global economic slowdown. London-based Rio, fending off a $79.9 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.''

Projects that are almost complete will start production while those at an ``early stage'' and without financial commitments ``will have to be given some latitude on the timing,'' he said.

Rio rose 36 pence, or 1.3 percent, to close at 2,900 pence on the London Stock Exchange. It's declined 46 percent this year and is 24 percent lower than the value of BHP's all-share offer.

Chinese Contraction

Copper, which accounted for 23 percent of Rio's sales in the first half, has fallen 44 percent in the past two months while aluminum has declined 24 percent.

Australian mining company shares may have further to decline because growth in China, the world's biggest buyer of metals, may contract further next year, JPMorgan Chase & Co. said in a report.

The view required ``for resource stocks to be attractive is too big a stretch, even if risk appetite and market conditions stabilize,'' analysts led by Paul Brunker said in a report dated Oct. 31. Brunker didn't specify any companies in Australia.

China's economy grew at the slowest pace in five years in the three months through September, the fifth straight quarter that expansion has cooled. The country's Purchasing Managers' Index, published Nov. 1 by the China Federation of Logistics and Purchasing, showed a contraction in September.

Aluminum Review

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 that is building 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.''

Rio, the world's second-largest producer of aluminum and iron-ore, rejected Melbourne-based BHP's sweetened, all-share offer on Feb. 6, saying it undervalued the company and its growth prospects. The offer is awaiting approval from European Union regulators, who last month told lawyers for BHP that the Australian company's bid may break antitrust rules, two people close to the case said.

Mongolia Plan

Rio said Oct. 15 it was reviewing its spending timetable and project costs. The company has already idled sections of its highest-cost aluminum plants. Rio's development plans include the $3 billion Oyu Tolgoi copper and gold mine in Mongolia, the $6 billion Simandou iron ore mine in Guinea and a $1.5 billion nickel project in Sulawesi, Indonesia.

The ilmenite produced at Rio's $1 billion QIT Madagascar Minerals mine in the island's Fort-Dauphin region is used to make paint and toothpaste. The company said in February it may double output at the project from a planned 750,000 tons a year.

To contact the reporters on this story: Brett Foley in Fort-Dauphin, Madagascar at bfoley8@bloomberg.net

Last Updated: November 3, 2008 12:11 EST