Rio Tinto drops maintainance, as cuts profits dividend flat

Rio Tinto Group has dropped its policy of maintaining or raising dividends each year as lower commodity prices cut its annual profit by 51%.

Underlying earnings fell to $4.54bn (£3.13bn) in 2015, from $9.31bn a year earlier.

 

Rio has held its full-year dividend at $2.15 a share, while the 2016 payout will be no less than $1.10 a share.

It said it was "no longer appropriate to maintain the progressive dividend policy".

Rio has joined other groups including Glencore and Brazil's mining giant, Vale, in adjusting dividend payouts to shareholders.

Balancing the books

Rio chairman Jan du Plessis said: "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."

It reported an annual net loss of $866m, hit by impairment charges of about $1.8bn.

These charges were due to its Simandou iron ore project in Guinea, which was affected by Ebola last year, Energy Resources of Australia Ltd, which is a uranium mine, and the Roughrider uranium project.

Mining companies, hit by weaker iron ore, copper and aluminium prices, are under pressure from rating agencies to curb spending to help them through the worst conditions seen in nearly two decades.

Rio is planning a further reduction in capital expenditure of $3bn and costs of $2bn over 2016 and 2017.