UPDATE 1-Rio Tinto to slash costs further to endure bumpy ride in iron ore

(Corrects CEO's name in second-last paragraph)

By Silvia Antonioli

LONDON, April 16 (Reuters) - Rio Tinto (Xetra: 855018 - news) , the world's second largest mining company, warned of "continued bumps" in its key iron ore market and vowed to stay focused on slashing costs to be the last man standing at a tough time for the sector.

The London-listed company and its rivals BHP Billiton (NYSE: BBL - news) and Vale are trying to cut production costs to the bone to remain competitive after a tumble in the price of iron ore in the last couple of years.

After losing almost three quarters of its value from a peak of about $190 per tonne in 2011, the outlook for the steel ingredient remains dire, due to a wave of new supply, mostly from the large producers themselves, smothering weaker demand growth.

"The reality is tough out there and as an organization all that we can do is to respond as best as we can in a tough environment," said Rio Tinto's Chairman Jan du Plessis at the company's annual general meeting.

Anglo-Australian Rio is the world's lowest-cost iron ore supplier and makes most if its profit from the steelmaking ingredient.

Its cost to produce each tonne of iron ore has fallen from an average of $19.50 a tonne in 2014 to around $17 this year thanks to a cheaper Australian dollar, which benefited Rio's giant iron ore mines in Australia, and weaker oil price.

The company is hoping to lower this figure further.

"With iron ore now trading around $50 we have more to do to ensure that we maintain the margin between ourselves and the high-cost producers," Chief Executive Sam Walsh said.

"Being the lowest-cost producer is not about a competition, or a bid to secure bragging rights. Rather, it's fundamental to the health of our business." (Editing by Vincent Baby)