Rio about-face on payment term

Mining giant Rio Tinto has backed down from its decision to double the payment period on its supply contracts after widespread criticism from politicians and an outcry from suppliers.

The reversal comes just days after the decision to extend the payment period, as reported by Business News last Friday, and will force the world's second largest iron ore miner to look at other options in its hunt to reduce costs.

"We value our partnerships with our suppliers and their feedback, so we have taken the decision to maintain our payment terms for those suppliers with contracts in place, as they were at March 30," a Rio Tinto spokesperson said.

Rio had told its suppliers the company would take 90 days to make payments instead of 45 days, in an effort to free-up cash flow and reduce working capital amid a prolonged commodities downturn.

The decision was to apply to all supply contracts greater than $US3 million ($A4 million).


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Osborne Park WA
Sam Walsh signed off on that poor decision to double the payment terms without consultation with the suppliers. Both parties need each other. There were signed contracts terms in place regarding payment terms. It takes two to agree and sign off on a revision to a contract.

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