Global miner Rio Tinto has posted its worst underlying earnings in 11 years and scrapped a generous payout policy in the face of a bleak outlook for the global economy. As David Pollard reports, the commodities rout is claiming other victims too.
Chinese copper demand has been up recently - iron ore prices too. Those aside, there are few signs of an end to the downward spiral in commodities for big suppliers like Rio Tinto. It's posting its worst underlying earnings in 11 years. Scrapping a generous shareholder payout policy - if not quite yet. CMC Markets' Michael Hewson. (SOUNDBITE) (English) MICHAEL HEWSON, MARKET ANALYST, CMC MARKETS, SAYING: "I think they're playing a very cautious game with respect to that. They haven't cut the dividend, but I think if commodity prices remain at their current low levels, that could be a risk going forward, and I certainly think in the context of BHP's results this week, this could actually be a foretaste of further dividend cuts to come." Slumping demand is forcing fellow miner Glencore to step up a battle against its 30 billion dollar debt pile - by selling another slice of future output. It sold some silver output in November for 900 million dollars in cash. This time, Canada's Franco-Nevada will pay half a billion dollars for precious metals. But as the oil majors continue to report, Total is announcing better-than-expected quarterly net profit. Upstream production is at a record, it says - margins for refining are high. It still plans to cut costs, though not jobs. Hewson says it needs to keep one eye on a better future. (SOUNDBITE) (English) MICHAEL HEWSON, MARKET ANALYST, CMC MARKETS, SAYING: "In the event that we get the supply glut worked off, when demand actually starts to outstrip supply, I think oil companies could actually struggle to gear up their operation to fill that gap." That a problem oil majors may only dream of having anytime soon - oil prices seen set for a possible drop to just $25 a barrel within days.