Rio Tinto plans to offload billions in costs through to the end of 2014. Photo ... - Sydney Morning Herald

Rio Tinto plans to offload billions in costs through to the end of 2014. Photo: Bloomberg

Rio Tinto will cut even deeper into its cost structures after announcing plans to cut $5 billion in costs by the end of 2014.

The campaign comes after a year of steep cost cutting that saw hundreds of jobs lost in Australia, particularly the Sydney corporate office, and will see the company's exploration budget cut by $1 billion.

Rio said capital expenditure will also "taper off" next year, with most analysts expecting the spend in 2013 to be close to $US14 billion: several billion dollars below spending rates in 2012. The company said sustaining capital expenditure would fall by more than $US1 billion next year.

This morning's announcement comes ahead of a summit with Rio's major investors in Sydney today, which is expected to focus on the company's iron ore and diamonds divisions.

Rio said recent signs from China pointed to a possible "economic pick up" in the middle kingdom, and Rio said it was "guardedly optimistic" about that nation's economic prospects.

Pilbara expansion

Iron ore is Rio's strong suit, and the company reinforced that today by revealing that its plans to expand iron ore exports from the Pilbara are running ahead of schedule.

The company said it had found a way to increase its iron ore export capacity by 7 million tonnes, lifting current capacity to 237 million tonnes per year. The increase was found through efficiency and de-bottlenecking, meaning it was achieved with "minimal capital spend".

The increase means Rio's longer term of goal of increasing exports to 353 million tonnes per year has been upgraded to 360 million tonnes per year. At current market prices, an extra 7 million tonnes per year is worth more than $US800 million in revenue.

Despite widespread expectations that the cost of the iron ore expansion plan would blow out on the back of a persistently high Australian dollar, Rio said it had been able to keep capital intensity at bay through efficiency measures.

Investors will also watch closely today for any news on the fate of Rio's diamond assets, which have been under official review since March.