The financial meltdown won’t push Rio Tinto to reconsider a takeover bid by BHP Billiton but the global miner is rethinking its capital investment projects around the world, its chief executive said on Tuesday.

The company was responding to the economic downturn by re-evaluating capital projects “across the board” to see if it could cut costs or delay them, CEO Tom Albanese told reporters after a speech in Montreal.

“What we’re doing is looking at all projects around the group, certainly looking at the timelines around those,” he said.

Albanese said costs of energy, construction, fuel and manufacturing had all spiraled higher before the crisis but declines are now expected.

“It’s important in these markets to retest the assumptions. For the past several years we’ve seen quite a bit of capital escalation in many of these projects so I’ve asked each of the engineers to go back, sharpen the pencils, see if we can use this opportunity to improve the economics of some of these projects,” he said.

He would not say which projects might be affected by the review but pointed to recent decisions to invest in the Kitimat smelter in British Columbia and a Quebec power plants as signs of the company’s fundamental confidence in the market.

Rio said on Tuesday it would invest $228 million in the construction of a new 225-megawatt, high-efficiency turbine at Rio Tinto Alcan’s Shipshaw power station in Saguenay, Quebec.

Albanese rejected the notion that the recent stock market rout of resource companies might force it to run into the arms of rival BHP Billiton , which has made a hostile bid for its rival that is now worth about $70 billion.

“What has happened in markets recently makes no difference to the reasons why we rejected the … offer,” he said.

Rio’s London-listed shares have taken a pounding as metals prices have decline in recent months. Since peaking in May, the stock is down more than two-thirds, and it has lost 35 percent since October.

Albanese said the BHP offer did not represent fair value to shareholders and that most of the “synergies” from the deal would be provided by Rio Tinto assets.

“The fact remains that BHP Billiton needs Rio Tinto while the reverse is not true,” he said.

Prices of major metals, already in decline, have only accelerated their slide since the financial crisis has set in. Copper is down 35 percent in October alone, while aluminum is down 15 percent over the same period, and the sharp rise of iron ore in the last few years looks to be a thing of the past. Rio Tinto is a major producer of all three.

After taking over Canadian aluminum producer Alcan last year, Rio said it would sell $15 billion in non-core assets in 2008. It has since said it might delay some of the sales due to the tough market conditions.

Albanese said on Tuesday the company is willing to wait until later to shed the assets if that means it will get a higher price.

“Certainly in this market the ability of buyers to attract financing is more difficult,” he said. “What we will be doing is focusing on value received and if we have to make a decision between trading off on value received and timetable we’ll focus on value.”.

Sounding upbeat overall on the medium-term prospects of recovery for the mining sector, Albanese continues to place hope in a strong rebound in China, the main driver of soaring demand for coal, steel and other commodities.

Rio Tinto has argued it is well positioned to withstand a possible global recession because of its low-cost operations and its exposure to China.

Chinese efforts to slow its overheated economy and bring inflation under control have been successful and it is now starting to inject stimulus into the economy that will translate into the beginning of a recovery in 2009 and a return to pre-crisis demand levels beyond 2010.

“We would expect that there will be some fiscal stimulus in place progressively over the next several months but realistically it’s going to take some time in 2009 before we start to see the benefits of it,” he said.

The drop in metals prices has prompted some companies to suspend mines and delay development projects, and Albanese said he expected some of the idle capacity, particularly in China, will not return when markets rebound. (Additional reporting by Cameron French, Editing by Frank McGurty)

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