MELBOURNE: Anglo-Australian mining giant Rio Tinto on Thursday posted a 65 percent slump in half-year net earnings to 2.5 billion US dollars after sharp falls in commodity prices hit the bottom line.

The firm said the drop in metals and minerals prices meant net earnings in the six months to June fell from the 6.9 billion US dollars recorded at the same point in 2008.

Chairman Jan du Plessis said prices had risen recently but the company was wary about the short-term outlook.

"We remain cautious about the recent rally in prices," he said.

"However, the expectation that development in emerging markets will generate underlying strength in minerals and metals demand over the long term remains broadly unchanged," he said.

Du Plessis said Rio Tinto was working closely with BHP Billiton on the firms' iron ore joint venture in Australia's Pilbara region, which Rio chose earlier this year over a 19.5 billion US cash injection from China's Chinalco.

Underlying earnings were down 54 percent to 2.4 billion US, roughly in line with market expectations. Rio said it would not pay an interim dividend.

Cash flow from operations was down 38 percent to 5.5 billion US.

Chief executive Tom Albanese said the company was reducing debt through asset sales and cutting expenditure.

"Despite difficult markets, our businesses are running smoothly," he said.

"We are on track to meet the commitments we made December last year to reduce operating expenditure and the capital expenditure estimate has been revised in line with market conditions."

Rio Tinto announced earlier this week that it was selling parts of its Alcan business to Australian packaging firm Amcor for 2.025 billion US dollars.

Rio borrowed heavily to fund its 38.1 billion US dollar takeover of Canadian aluminium group Alcan in 2007 and the miner is selling non-core assets to reduce debts.

Bell Direct analyst Julia Lee said the result was not a shock to the market.

"It's pretty much in line with expectations, maybe slightly below," she told Sky Business.