UPDATE 1-Brazil's Vale expects iron ore price to recover in Sept

* Kronau potash project in Canada not to be implemented now

* Annual growth in China could be slower at 7 to 7.5 pct

RIO DE JANEIRO Aug 16 (Reuters) - Brazil's Vale, the world's No. 2 mining company, expects iron ore prices to start recovering in September due to falling stocks in China, Chief Executive Murilo Ferreira said on Thursday.

Ferreira said supplies of the metal in China, Brazil's main trading partner, would last 20 days rather than the previous 30 days and could soon pressure global markets.

Iron ore prices are hovering around $120 per tonne compared with the year-ago price of between $170 and $180 per tonne. The slowdown could affect the diverse miner's operations, he said.

Vale is reconsidering its Kronau potash project in Canada, which requires an investment of $3 billion in its initial phase.

"The project will not be implemented now," Ferreira told journalists in Rio de Janeiro, where the company is based.

He said growth in China, the world's second-largest economy and main market for iron ore, could be between 7 percent and 7.5 percent rather than 8 percent if private investment misses expectations.