Rio Tinto plans to cut its operating costs by a further $2 billion and reduce dividends by as much as half as the miner deals with a global fall in commodity prices.
Outgoing CEO Sam Walsh said another $1 billion will go from costs this financial year and another $1 billion in 2017.
The company is also removing $3 billion of capital expenditure on top of previous guidance.
And it told shareholders their dividends this could could be as low as 110 US cents, about 48% down on last year’s payout.
“These actions are designed to ensure we maintain our balance sheet strength and deliver shareholder returns commensurate with the economic environment and supported by the quality of our world-class assets,” Walsh told the company’s annual general meeting in Brisbane.
The miner has cut costs, frozen wages, increased ore output, pulled back on capital spending and is reducing debt in response to falling commodity prices.
But Rio Tinto in February posted a full-year net loss of $US866 million compared to net earnings the previous year of around $US6.5 billion.
Rio Tinto has taken more than $6 billion of costs out of the business since 2013.
“While we have achieved a great deal, we recognise the current environment requires even more from us,” says Walsh.
Last year it maintained its shareholder payout at 215 US cents, but the company decided to abandon its progressive dividend policy.
Chairman Jan du Plessis told the AGM the board intends that the full-year dividend will be not less than 110 US cents a share.
“Beyond 2016, we expect total cash returns to shareholders to be in a range of 40% to 60% of underlying earnings,” he says.
“Over the longer term the board is committed to maintaining an appropriate balance between cash returns to shareholders and investment in the business, with the intention of maximising shareholder value.”