Bad news for stockholders of Rio Tinto – its share dividends this year will be at least half what they were last year.
That comes after the world’s second largest mining company slumped to a net loss for 2015 and posted its worst underlying earnings in 11 years.
That means Rio Tinto has gone back on a promise to never cut its dividend payout from year to year.
“Whilst 2015 was a volatile year, 2016 is shaping up to be even tougher. The macro outlook remains challenging,” Chief Executive Sam Walsh told reporters.
The move opens the way for arch rival BHP Billiton to do the same later this month.
Miners are under pressure to hang on to cash amid the worst commodity price downturn the sector has suffered in nearly two decades.
The dividend decision also gives Rio Tinto flexibility to pursue acquisitions in future, analysts said, and Walsh acknowledged his team was keeping an eye out for top-tier assets, particularly in copper.
“Getting the balance right between growth and shareholder return is important to us,” he said on a conference call with analysts.