The move paves the way for arch rival BHP Billiton (BHP) to take a similar step later this month, as miners come under pressure to shore up cash to weather the worst downturn to hit the sector in nearly two decades.

“Whilst 2015 was a volatile year, 2016 is shaping up to be even tougher. The macro outlook remains challenging,” Chief Executive Sam Walsh told reporters.

The world No. 2 miner bowed to pressure from investors and credit rating agencies to give up its “progressive dividend” policy, under which it promised never to cut its payout from year to year, to better reflect commodity cycles.

Rio (RIO) still managed to hold its 2015 full-year dividend steady at $2.15, although below market forecasts, at a time when all its peers are tipped to cut or suspend their payouts.

It promised to pay at least $1.10 in 2016 as a transition to the new policy, limiting any cut to 49%.

“This is a really nice way for the market to take on board that BHP will announce in two weeks it will cut (its dividend). Any doubt is gone,” said Peter O’Connor, an analyst at Shaw and Partners in Sydney. BHP is expected to cut its interim dividend at least in half.

Rio Tinto shares fell 5.9% in early trade in London, while BHP Billiton was down 4.8%.

Spending Shift

Walsh said uncertainty and a rapid drop in commodity prices over the past two months had hit all aspects of the global economy, calling for a shift in how the company spends its money.

Rio aimed to slice a further $2 billion off operating costs over the next two years, after having cut $1.3 billion last year, beating its own goal.

It also planned to slice capital spending by $3 billion more than previously flagged over the next two years, although Walsh said that would not be at the expense of its investments in a new iron ore mine in the Pilbara, an expansion of the Oyu Tolgoi copper mine and a new bauxite mine in Australia.

Rio reported a net loss of $866 million, hammered by $1.8 billion in writedowns, relating mainly to its Simandou iron ore project in Guinea, and exchange losses on debt.

Underlying earnings fell 51% to $4.54 billion in 2015 from $9.31 billion a year earlier hit by weaker iron ore, copper and aluminum prices, and in line with analysts’ forecasts.

Earnings in the six months to December shrank to $1.6 billion, just over half what it earned in the first six months of the year.

Standard & Poor’s and Moody’s have warned they may cut miners’ ratings, citing concerns over their dividend policies.

Rio Tinto is in a stronger position than its rivals as it has reduced net debt sharply over the past three years.

Rio‘s net debt stood at $13.8 billion as of the end of December 2015, well below $14.8 billion expected by analysts.