Mining group Rio Tinto has scrapped efforts to sell its loss-making Pacific Aluminium business, blaming poor market conditions, as weaker iron ore, copper and coal prices dragged its first-half profit down by 18%.

Rio, which has put a handful of assets on the block as it concentrates on core operations and gets to grip with US$22 billion of debt, said in 2011 it could hive off Pacific Aluminium, known as Pac Al. But it said in a statement yesterday that it had not found a buyer and would not pursue a spin-off to shareholders.

Chief Executive Sam Walsh said there had been a number of offers for the business but all had been below the price Rio wanted. Instead it will bring Pac Al back into the fold of Rio Tinto Alcan, its main aluminium business.

"I'm a pragmatist," said Mr Walsh. "It doesn't make sense to give things away just so you can tick the box." Pacific Aluminium is the owner of NZ Aluminium Smelters (NZAS) which owns the Tiwai Point smelter in Southland.

Early yesterday, NZAS and Meridian Energy announced that they had struck a revised power supply agreement, with the help of a $30 million cash injection from the Government.

Under the deal, the smelter is guaranteed to stay open for another three years and four months, to the end of December 2016. However, it could close from January 2017 onwards.

The world's biggest miners, under pressure from investors to refocus sprawling portfolios, tackle debt and even return cash, have put billions of dollars of unwanted assets up for sale but buyers are scarce.

"It's a clear indication that while ... all of the majors see an opportunity to try to bolster their balance sheets by getting rid of their non-core assets, it's not the ideal market to be selling assets in," said analyst Hunter Hillcoat at brokerage Investec in London.

Some analysts took a negative view of Rio's decision to give up on a sale so soon after shelving the divestment of its diamond assets, and as doubts grow over its ability to sell larger operations, like Canadian iron ore.

Rio has so far this year announced or completed US$1.9 billion of sales, but these have been copper mines and projects, where demand has been stronger and sales more straightforward.

Other analysts, though, welcomed Rio's decision not to sell at all cost in the hope of cutting enough debt to avoid a downgrade. "The single A rating in a low interest rate environment is not that critical," said Glyn Lawcock, UBS analyst in Sydney.

Rio is still carrying the burden of its US$38 billion takeover of Canada's Alcan, a poorly timed 2007 deal which has racked up US$30 billion in writedowns, with the mining group booking losses in aluminium as demand slumped and Chinese output soared.

To help address such issues, in 2011 it put Pac Al into a separate business, which analysts at Credit Suisse had valued at between US$2 billion and US$3 billion. The move back into Rio's main aluminium arm, it said, could cut some administrative costs.

Mr Walsh has said Rio expects progress on its divestments but he declined to comment on other asset sales, after he said the public diamonds and Pac Al sales processes proved a distraction.

Cost campaign: Underlying earnings for the group fell 18% to US$4.23 billion in the first six months of the year, in line with forecasts. Weaker prices, particularly iron ore, took US$1.3 billion off the earnings.

Net profit fell to US$1.7 billion, hit by a non-cash currency exchange loss of $1.9 billion and a $300 million write-off after a landslide at Bingham Canyon copper mine in the United States.

Rio's rivals have also reported weaker earnings and matched its promises to cut costs - Vale on Wednesday posted operating numbers that pointed to a tougher environment after a decade of growth. Only BHP Billiton is expected to see a profit increase in the six months.

In iron ore, the main driver for Rio's business, underlying earnings fell 14% - a steeper drop than expected. But the group said it was on track with its expansion in Australia's Pilbara mines to capacity of 290 million tonnes a year, up from forecast production of 265 million in 2013.

Rio will decide on a further push to production capacity of 360 million tonnes later this year, but Walsh told analysts that timing the main issue for the "robust" project, which he said Australian investors have supported more strongly than Rio's shareholders in Europe and Britain.

"We have a lot of flexibility. We can bring on the full 70 million tonnes, we can bring on zero, or anything in the middle," he said. "It will depend on what the market needs."

On its closely watched campaign to slash $5 billion in costs over two years, Rio said it had cut $1.5 billion in the first half of this year at its operations and in exploration spending. That includes $977 million from operating cost savings - putting it on track to hit a $2 billion target for 2013. Spending for the year is expected to be around $14 billion, 20% below 2012's peak but above some forecasts.

It raised the dividend 15% to 83.5 cents a share, the lowest increase since it cut the payout after the financial crisis. Rio's London shares were up 2.1% at 3016.5 pence in afternoon trading, when the Stoxx 600 Europe basic resources sector index was up 2.7%.