Rio Tinto will put forward its previously mooted extended payment terms, pushing payment out to between 60 and 90 days, for its multinational and largest suppliers.
Rio Tinto has announced it will ask larger contractors and supply companies to consider 60 to 90 day payment terms following its overturn of the original decision in April this year.
This decision was driven by continued low commodity prices, Rio assuring the WA Government that any extension will be negotiated.
A Rio spokesperson told Australian Mining, “Under new contract negotiations, we will ask only our larger multinational suppliers to consider 60 or 90-day terms, but this will not be imposed on any business, we will negotiate these terms with them.”
Rio Tinto has previously been quoted as saying the original plan to push payment to 90 days would have impacted fewer than 10 per cent of Rio’s suppliers, with the focus on supplier contractors greater than $3.9 million.
Contract mining and engineering services companies told The West Australian that Rio is “aggressively challenging invoices” which could extend payment terms by months, with one supplier saying, “It seems they might be trying to do it by stealth.”
Rio’s initial doubling of payment terms, in an attempt to free up cash flows and resolve account invoices, saw a backlash from State and Federal Governments with WA premier Colin Barnett urging a reverse of the decision. The change would have seen some contractors and suppliers waiting up to 120 days for payment.
Speaking to Australian loan company InvoiceX earlier this year, director Dermot Crean told Australian Mining, “What is the intent here? To put them [workers] out of business?”
The miner later overturned its decision due to mounting pressure, maintaining their 45-day payment terms.