Rio Tinto succumbs to Aussie pressure on payment terms

Global giant Rio Tinto Ltd has backed down from extending it's payment terms following intense Australian business and political pressure.

Rio on Thursday scrapped its controversial plan to double its payment terms on supply contracts worth 24 billion Australian dollars. Previously the payment terms for supply contracts valued at upwards of three million Australian dollars each was 45 days.

Suppliers had lobbied senior Australia politicians, who then slammed the giant claiming it was an abuse of market power, potentially leading to a collapse of small businesses.

"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," Rio Tinto said in a statement to media on Thursday.

"Future arrangements with our suppliers will be negotiated as part of any discussions about new contracts to maintain the competitiveness of our business and our future ability to develop our assets."

The original move, announced at the weekend, was part of the miner's measures to shore up the balance sheet, free up cash and reduce working capital as it seeks to maintain its workforce and, where possible, develop its "world class" assets in the current resources rout.

Rival BHP Billiton Ltd. doubled its payment terms on 14 billion Australian dollars worth of supply contracts to 60 days last year after an internal review found the terms were "significantly shorter than the standard terms in the marketplace." Endit