Rio Tinto (RIO.AX)(RIO.L) will cut coking coal production as demand from Asian steel mills weakens amid the global slowdown, though rival BHP Billiton (BHP.AX) (BLT.L) is still to decide whether cuts are needed.

A Rio Tinto Coal spokeswoman confirmed on Friday that production would be cut by 15 percent at its Kestrel mine, one of two coking coal mines operated by the group in Australia's northeastern state of Queensland.

Rio Tinto follows United States-based Peabody Energy, London-listed Xstrata plc (XTA.L) and Australia's Macarthur Coal Ltd (MCC.AX), which have all announced reductions in output of coking coal, used in steel-making, in the past month.

But, BHP, the world's top exporter of coking coal, is keeping its options open.

We obviously always watch the market closely and keep a close relationship with our customers but there's nothing more I can say ahead of our production report, a BHP spokeswoman said.

BHP, which accounts for about 25 percent of the global seaborne trade in coking coal, will release its second-quarter production report on Jan. 21.

Demand for steel has weakened sharply since August as economic growth cooled or stalled in many global economies. World steel production from the 66 countries that reported to the World Steel Association fell 19 percent for the 12 months to November, to 89 million tonnes.

Kestrel, 80 percent owned by Rio Tinto and 20 percent by Mitsui (8031.T), produced 2.3 million tonnes of coking coal and 668,000 tonnes of thermal coal in the nine months to September, the latest period for which data was available.

Rio's other Queensland mine, Hail Creek, had not made cuts but was closely monitoring the market, said company spokeswoman Allison Smith.

It's a fluid market so it is assessing things on a day-to-day basis, she said. Hail Creek has the capacity to produce 8 million tonnes of coking coal a year.

Rio Tinto is trimming costs across the group as it grapples with a debt burden of nearly $40 billion.

On Dec. 10, the global miner said it would cut 13 percent of its workforce, slash capital spending by more than a half and sell more assets as it battles with a collapse in commodity prices.

Rio Tinto will release its final quarter production report on Jan. 15 but a spokesman said it was most likely more details of cost reduction initiatives would be revealed in the group's annual profit report due on Feb. 12.

Peabody said on Wednesday it would cut coking coal output at its Australian mines by 2 million tonnes a year. It said total Australian production was expected to be 22 to 24 million tonnes.

Xstrata last month suspended longwall mining at its Oaky Creek Number One project in Queensland. Oaky Creek Number One in 2007 yielded 6.2 million tonnes of coal out of a total of 11 million tonnes produced at Oaky Creek. Macarthur Coal, which produces a pulverised coal injection product for use in blast furnaces, also cut jobs and reduced output at its Queensland mines last month. It now expects to sell about 3.9 million tonnes of coal in the year to June 30, down from an earlier forecast of 5 million tonnes.

(Editing by James Thornhill & Kim Coghill)

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