Australian Foundation Investment Co, a fund owning shares in BHP Billiton Ltd and Rio Tinto Group, said it would encourage companies to cut back on investments in new operations as commodity prices fall.

Mining companies will start to question the economics of projects as prices fall and costs rise, Ross Barker, chief executive officer of the listed Melbourne-based fund with a market value of A$4.5 billion ($4.7 billion), told the Australian Broadcasting Corp's Inside Business program. "That is obviously something we would encourage because we don't want to spend large amounts of money and not get good returns."

Mining companies are reassessing spending plans as commodity prices drop, amid concern over growth in Europe and China, the biggest metals consumer. China's economy expanded at its slowest pace for six quarters in the three months to the end of June. BHP Billiton, the world's largest mining company, needs to be flexible in the face of change, CEO Marius Kloppers said last month.

BHP Billiton will delay approval of a $33 billion mine expansion in Australia for two years until 2014 because of falling commodity prices, the Australian newspaper reported, citing a document prepared by an unidentified consultancy.

The board of Melbourne-based BHP Billiton is due to decide on proceeding with the Olympic Dam copper-uranium-gold mine expansion by the end of this year.