Rio Tinto (RIO.L)(RIO.AX) said it would cut diamond output at its Argyle mine in Western Australia and slow its underground mine development as part of its plan to slash spending and cut net debt by $10 billion this year.

The Argyle mine, located 2,500 kilometres (1,553 miles) north of the west Australian city of Perth, is the world's top producer of pink diamonds, producing over 90 percent of the world's output.

Effective immediately the Argyle Underground Project will be slowed to only critical development activities, resulting in a workforce reduction and a demobilisation of contractors, Rio said on Wednesday in a media release.

In response to tough global market conditions, Argyle's diamond processing facilities would be shut down for maintenance for up to three months starting in March, said Argyle's chief operating officer Kevin McLeish.

Earlier, the main contractor to the mine, Macmahon Holdings Ltd (MAH.AX), said the slowdown was likely to cut its contract revenue from the project by 75 percent to just under A$20 million ($13.3 million) a year until full development activities restart.

Rio, the world's fourth-biggest diversified mining company by market value, has announced a number of production cutbacks this week as it scrambles to cut costs to make sure it can meet payments later this year on nearly $40 billion of debt.

A $2.15 billion expansion of its Corumba iron ore mine in Brazil was postponed, while a $230 million plan to extend its Northparkes copper mine in Australia was also shelved.

The firm unveiled plans on Dec. 10 to cut 13 percent of its workforce, slash capital spending by more than half and sell assets.

Rio will release its production report for the fourth quarter on Thursday. ($1=A$1.50) (Reporting by Bruce Hextall and James Thornhill; Editing by Sonali Paul)

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