A worker poses with a handful of nickel ore at the nickel mining factory of PT Vale Tbk, near Sorowako, Indonesia's Sulawesi - Reuters Photo.
SYDNEY: Rio Tinto on Thursday posted an annual net loss of US$866 million in what the mining giant said was a “highly challenging environment” as commodity prices plunged and the Chinese slowdown hit hard.
The dire result compared with a US$6.53 billion net profit in the previous reporting year.
Underlying profit in the 12 months to Dec 31, a measure the world’s second-largest miner prefers, slumped 51% to US$4.54 billion, from US$9.31 billion previously.
In a reflection of the tough times, Rio joined other large players including Swiss giant Glencore and Brazil’s Vale in adjusting dividend payouts to shareholders.
The Melbourne-headquartered firm, which is heavily reliant on iron ore, said it was dumping its progressive dividend policy, in which shareholders are given gradually higher payouts.
It announced a 2015 full-year return of 215 US cents, the same as last year, but said it would fall to no less than 110 US cents in the 2016 year.
“With the continuing uncertain market outlook, the board believes that maintaining the current progressive dividend policy would constrain the business and act against shareholders’ long-term interests,” Rio chairman Jan du Plessis said.
The Anglo-Australian firm, which like other miners have been forced to tighten their belts amid dire commodity markets, said it was slashing costs by US$1.0 billion this year and hoped to cut another US$1.0 billion in 2017.
Capital spending would be cut by US$3.0 billion over 2016 and 2017 to US$4.0 billion and US$5.0 billion respectively.
“Against a highly challenging environment, Rio Tinto delivered a strong performance in 2015 with underlying earnings of US$4.5 billion,” Rio chief executive Sam Walsh said in a statement. “The continued deterioration in the macro environment has generated widespread market uncertainty.” - AFP
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