The world's third biggest miner Rio Tinto says Chinese stimulus measures should boost demand and prices for commodities later this year.
However, the company's chief executive Tom Albanese has also told ABC TV's The Business that the company will need to keep focussing on cost cutting to maintain its profit margins.
Rio recorded a 34 per cent slide in underlying profit, but still beat low expectations.
Rio Tinto says its first-half profit excluding one-off items was $US5.15 billion ($4.88 billion), beating the median analyst prediction of $4.9 billion ($4.65 billion).
The Anglo-Australian miner's statutory net profit was higher at $US5.89 billion ($5.58 billion), but still down 22 per cent on last year.
The company says its net earnings include a $989 million deferred tax asset following the introduction of the Minerals Resource Rent Tax in Australia.
Despite the fall in profit, Rio has announced a 34 per cent increase in its interim dividend to 72.5 US cents (69 cents).
Analysts expected falling Chinese demand for iron ore and coal to negatively affect the company's bottom line, largely through a substantial fall in prices for Rio's main products.
Lower prices wiped almost $US2 billion off the mining giant's half-year profit compared to the first half of 2011.
However, the company has not cut back its $US16 billion ($15.2 billion) expansion plans, expecting Chinese demand to improve later this year.
The cornerstone of that expansion is an increase in Pilbara iron ore output to 283 million tonnes per annum by the end of next year, and 353 million tonnes by the first half of 2015.
The company's chairman Jan du Plessis says, while lower prices hurt profits in the short-term, he is confident there will be demand for the company's increased output in the future.
"Whilst we are mindful of short-term uncertainties we remain convinced of the strength of the long-term demand outlook," he noted in the report.
"We have taken a considered approach to investment, committing capital only to projects that will deliver value for shareholders under any probably macroeconomic conditions." The company's chief executive Tom Albanese says he expects around 500 Chinese infrastructure projects to commence over the next year, driving demand for commodities, but adds that the company's projects are still profitable in an environment of lower prices.
"There is quite an effort with policy makers and planners in China to kick in a number of stimulus efforts," he told ABC TV's The Business.
"It's not going to be anywhere near like the stimulus we saw in 2009 but, for our business, we do think it's going to be lifting some of the fortunes of some of our products, but frankly we are in a different market." However, Mr Albanese says the days of enormous profit growth on surging commodity prices appear to be well and truly over.
"Europe is in a much different position so we have to continue to stay resilient, we have to continue to work with a strong balance sheet and focus on our cost structure first and foremost," he added.
Rio Tinto recently announced a small number of job losses connected with the closure of its Sydney office, and also plans to cull staff from its Melbourne office.
Coal mine closure Rio Tinto has also announced the closure of its Blair Athol coal mine near Clermont in central Queensland.
The company says mining operations will end this year, after almost three decades of production.
Rio's Clermont region general manager operations Dawid Pretorius says the mine has been scaling back production since 2010, in anticipation of closing.
"After close to three decades, Blair Athol Mineâs coal seams are largely mined out and the time has come to finish production," he said.Â "Coal mining has a long and proud history at Blair Athol, dating back to the late 1800s when coal was first discovered in this area.
At its peak, Blair Athol Mine was Australiaâs largest exporter of thermal coal, blessed with uniquely thick coal seams." Mr Pretorius says the company originally planned several years ago to shut the mine in 2012, but had looked to extend its life due to surging thermal coal prices.
However, the recent fall in thermal coal prices, rising costs and a high Australian dollar have meant that mining the poorer quality and harder to reach coal is no longer economically viable.
Rio Tinto says around 30 of the mine's current 170 employees will be retained after the closure to work at the coal handling plant, and help rehabilitate the mine site.