Yarwun, QAL suppliers given lifeline as Rio doubles pay wait
RIO Tinto has doubled the period contractors need to wait before they get paid.
It's a move that will likely put financial pressure on suppliers, but a spokesman for the mining giant said it's an "initiative designed to free up cash and reduce working capital".
The spokesman said the measure was needed to "preserve and maintain jobs and suppliers in tough global environment for commodities".
Rio first pre-empted the "measures to free up cash" in February, at a results presentation.
The company stressed that "our goal is to continue to be a reliable business partner for our customers and suppliers while continuing to run a strong business for our shareholders and stakeholders".
And Rio is enjoying a surge in its share price since the news was reported by southern media at the weekend, with Rio recording a $43.31AUD share price when the stock market closed on Friday and a $47.44 share price at 1:30pm today.
Rio said it would "work with banks to use [their] strong credit rating" to secure financing for smaller suppliers, usually with contracts worth less than $3 million.
It's understood this is likely to apply to smaller suppliers that have contracts with Rio's operation in the Gladstone region.
"This programme is being piloted with several suppliers in our aluminium business, and we intend to make it more broadly available from mid-year 2016.