Rio Tinto’s Argyle Diamonds Ltd. will slow down its underground mining project and ease diamond production in 2009 at its Argyle mine in Western Australia.

The mining company said in a statement Wednesday that the slowdown is in response to Rio Tinto’s debt reduction plan and the current global market conditions.

Effective immediately, the Argyle underground project will be slowed to critical development activities, resulting in a workforce reduction and a demobilization of contractors, the company said.

“Given global market conditions, we will also reduce diamond production by taking an extended maintenance shutdown of the diamond processing facilities for up to three months, commencing in March,” said Kevin McLeish, chief operating officer, Argyle Diamonds. “Employees directly affected will be redeployed to maintenance, training and plant improvement activities as well as taking leave.”

Jean-Marc Lieberherr, general manager – Diamonds Sales and Marketing for Rio Tinto, noted that the surface operation processing plant will be shutting down for a few months beginning in March and underground development will be slowed down.

“It won’t affect the surface production, other than the timing of it by a few months, but it will delay the ramp up to the full underground operation,” Lieberherr said.

The Argyle diamond mine is the world’s largest producer of pink diamonds, supplying more than 90 percent of the world’s pink diamonds.

“It is important to reaffirm Argyle’s commitment to the East Kimberley remains a priority in our response to these unprecedented global and market events,” McLeish added. “We remain convinced that the diamond business has excellent long term prospects. Argyle has at least 10 years of world class resources remaining and is well placed to continue as a major player in this industry for many years to come.”

JCK