Mining giant Rio Tinto has reported an $US866 million ($A1.2 billion) annual loss, and has responded by cutting its future dividends, operating costs and capital spending, though the long-planned Silvergrass mine in the Pilbara is shaping up as one of the company's few big projects to proceed.A collapse in commodity prices contributed to Rio's plunge into the red in 2015, from the previous year's $US6.5 billion profit.Chief executive Sam Walsh said 2016 is shaping as an even tougher year, amid continuing volatility and uncertainty on global markets."Certainly the game has changed," he said."We've seen a rapid decline in commodity prices and we're taking proactive action."We're taking leadership in relation to responding to this and it's not just a matter of looking at dividends, it's looking at every single aspect of the business."Rio will end its current progressive dividend policy in favour of a more flexible approach to reflect the company's performance.It will pay dividends of $US2.15 per share for 2015, and said it intends for 2016 full year dividends to fall to no less than $US1.10.A new $US2 billion cost cutting program has also been launched for 2016 and 2017, while capital expenditure will be reduced by a further $US3 billion than already planned over the next two years.Rio's shares in London fell seven per cent in early trade as investors digested the bad news.Mr Walsh was unable to rule out further dividend cuts if commodities prices continue to weaken in 2016."We're in the best possible position to face whatever is thrown at us this year and future dividend outcomes will really rely on the market conditions," he said.Maintaining the long-running progressive dividend policy would have constrained the business and acted against shareholders' long term interests, he said.The board expects total cash returns to shareholders over the longer term will be 40 to 60 per cent of underlying earnings.Rio's underlying earnings more than halved to $US4.5 billion in 2015.The miner said it will keep an eye out for high quality distressed assets in the current market, and plans to speak to credit rating agencies about its new plans after Standard and Poor's recently put the company on negative watch.
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