Rio Tinto finance chief Chris Lynch said the sharp fall in the iron ore price in 2014 has caught the mining giant by surprise but rejects claims the company is flooding the market with excess supply.

Iron ore has fallen by nearly 47 per cent so far this year.

It hit a low of US$68.49 ($82.59) on November 26 and on Monday was trading at $US71.77.

Mr Lynch, tipped as a possible successor to Rio boss Sam Walsh, said the price was lower than both Rio and the wider iron ore industry expected.

"Is it lower than where I thought it would be right now? Well I don't try and predict where it is near term but it is probably lower than where I think anyone saw it would be immediately," Mr Lynch told Fairfax Media. "But you could also say the same is true for oil - and coal probably."

Oil has lost around 40 per cent of its value this year with Brent crude currently trading near five-year lows of just $US68 a barrel while both coking and thermal coal have fallen by over 15 per cent in 2014.

Mr Lynch said the miner was focused on stripping out costs which were inflated during the boom years as Rio works toward hitting an expansion target of 360 million tonnes later this decade.

"As much as we'd like it to be different, it's still a cyclical industry. During the really hot market years, costs were being bid up fairly heavily," Mr Lynch said. "Now those costs are hard to get out but once you have the opportunity to do that you need to take advantage of that opportunity and I think we are in that mode now. There is a lot more competitive pitching in bids and costs are coming down."

Glencore boss Ivan Glasenberg - who is chasing a $190 billion "merger of equals" with Rio - has attacked the aggressive strategies being used by Rio and BHP, arguing they have flooded the market with iron ore which has in part sparked the slump in prices.

A similar accusation has been repeated by West Australian Premier Colin Barnett who in October accused Rio and BHP of "acting seemingly in a concert way" by flooding the market.

Mr Lynch dismissed the charges and said Rio was operating a strong business in a volatile market.

"We can always choose to run our assets as we choose to run them but the concept of deliberately trying to manipulate the market isn't something we would ever contemplate," he said.

"There are always going to be slight mis-matches whenever you've got a long term view of what demand looks like and supply will come at various rates. At times it will come a little more than immediate demand, at others it will come too slow. But eventually it will work its way out in the market."

Rio Tinto's cash costs for producing iron ore are thought to be between $US18 and $US19 a tonne.

Rio's break-even is around $US42 a tonne, which includes cash costs, government royalties, shipping, finance and other corporate costs. That compares with BHP which is understood to have a break-even point of about $US45 a tonne.