Rio Tinto Ltd. said Tuesday it would cut more than 700 jobs at Australian mines, or about 23 percent, due to a drop in aluminum demand and prices.

According to Australian press, Rio Tinto -- which had argued to the Federal Government that it’s $US19.5 billion investment deal with Chinalco would save at least 2000 jobs -- is now slashing jobs even though the deal has not approved.

What Rio has done is very foolish, said National senator, Barnaby Joyce, who is opposed to the Chinalco deal. It is a little bit hypocritical against their formal statements it will save jobs.

It also said it will delay the completion of its $2.5 billion Yarwun refinery expansion project in Gladstone until 2012.

However, Rio Tinto's Alcan bauxite and alumina head Steve Hodgson said the depressed state of the market and high demand in global economic crisis meant tough decisions were necessary.

We are strongly focused on minimizing costs and conserving cash, Hodgson said.

Recently, London-based Rio Tinto has been slashing production and jobs worldwide to lower its debt by sheds 14,000 jobs worldwide or about 12.5 percent of its workforce in January.

An Ord Minnett analyst, Peter Arden also said he was surprised by Rio's decision to postpone the expansion because it was one of the assets important to Chinalco.

Rio shares closed $5.92 lower at $53.18 in Tuesday’s London trading.