Rio Tinto Doubles Supplier Pay Terms to 90 Days to Free Up Cashby
Rio Tinto Group doubled payment terms for its suppliers to 90 days from 45 days as the world’s second-biggest mining company adjusts to the slump in commodity prices.
“This initiative is designed to free up cash and reduce working capital so that we can preserve and maintain jobs and suppliers in tough global environment for commodities,” according to an e-mail from a Rio spokesman. He confirmed that Chief Executive Officer Sam Walsh had written to suppliers March 31, as reported Saturday by the Australian newspaper.
Rio is piloting an optional financing program to support suppliers for its aluminum business and plans on making the assistance plan more broadly available from the middle of this year, according to the e-mail.
The mining company announced March 17 that Walsh will retire July 1 and named its top copper executive Jean-Sebastien Jacques to succeed him. Rio announced the change with the worst commodity price slump in a generation eroding profits and forced competitors, including Glencore Plc and Anglo American Plc, to sell assets amid pressure from investors and credit ratings agencies to conserve cash. The Bloomberg Commodity Index of returns on about 22 raw materials tumbled in January to the lowest since 1991.