Reuters reported that Rio Tinto aims to cut capital spending by a fifth in each of the next two years as it focuses on paying down debt and boosting returns to shareholders.

Rio also forecast a resurgence in steel demand in China, its biggest customer for iron ore, estimating demand growth at 7.5% this year. It was on track to meet its AUD 2 billion cost cutting target for 2013 and has already beaten its target for cutting exploration spending.

The world's no.2 iron ore miner plans to cut capital spending to AUD 11 billion in 2014 from just under AUD 14 billion this year and sees capital spending at AUD 8 billion in 2015. Steel demand growth in China is set to more than triple this year with further steady growth ahead.

Mr Sam Walsh CEO of Rio Tinto said that "In China, the decisions from the government's Third Plenary Session last month reflect an ambitious yet pragmatic approach to continued reform and confirmed our expectation of gradual change, which reduces the likelihood of a sudden downturn."

However, he also sounded a note of caution about the global outlook despite signs of modest economic recovery. From where I stand, we continue to see market fragility and volatility.