Hong Kong

BHP Billiton has accepted that dividend pledges and natural resources do not mix. The world's largest miner has slashed cash returns to shareholders and followed rival Rio Tinto in scrapping a "progressive" policy. It is about time. Promising that payouts will only increase or hold steady is daft in such a cyclical sector. And consistency matters less than safeguarding BHP's balance sheet.

Reporting on Feb 23, the group slashed its interim dividend by 74 per cent to US$0.16 a share. From now on, BHP says that it will take a more flexible approach. Payments will be set relative to earnings and it will distribute at least half of net profit before one-offs.