Rio Tinto Ltd has suspended an underground mine development and postponed an automated train program to conserve cashflow and reduce debt amid the global economic downturn.

The suspension of the $US160 million ($A235.78 million) underground project at Northparks mine in NSW will result in the loss of 346 jobs.

Twenty-six staff will be made redundant and 320 contractors will have their contracts finalised.

The suspension in NSW and deferral of the $US371 million ($A546.71 million) automated train program in Western Australia are the latest initiatives instituted by the company.

The actions follow a decision last week by Rio Tinto, the world's second largest iron ore producer, to postpone a $US2.15 billion ($A3.17 billion) expansion to its Corumba iron ore mine in Brazil.

Rio Tinto is undertaking a range of measures, including job cuts and the deferral of capital expenditure, to preserve cashflow and reduce its debt levels in response to the global economic downturn.

"As a result of a significant reduction in the copper price of over 60 per cent since June last year combined with the global economic downturn, construction of the E48 underground project will be suspended," Northparkes general manager Craig Stegman said in a statement.

Rio Tinto shares shed $1.43, or 3.46 per cent, to $39.87 by 1416 AEDT.

The company has committed to reduce its large debt position - which was incurred through the takeover $US38.1 billion ($A56.15 billion) of aluminium producer Alcan Inc - by $US10 billion ($A14.74 billion) by the end of 2009.

Rio Tinto has also deferred part of the underground expansion of its Argyle diamond mine in WA and reduced output from the Kestrel coking coal mine in Queensland by 15 per cent.

The production cut at Kestrel resulted in the loss of 50 full-time equivalent staff.