Contractor payment push a 'misjudgement': Rio

RIO Tinto chairman Jan du Plessis and CEO Sam Walsh have apologised for trying to double payment terms for suppliers, as it emerged that it is continuing to push some contractors for extended terms.
Contractor payment push a 'misjudgement': Rio Contractor payment push a 'misjudgement': Rio Contractor payment push a 'misjudgement': Rio Contractor payment push a 'misjudgement': Rio Contractor payment push a 'misjudgement': Rio

Rio chairman Jan du Plessis and CEO Sam Walsh

Kristie Batten

The company came under fire three weeks ago for asking suppliers and contractors to double payment terms for some contractors and suppliers to 90 days.

After an uproar from suppliers and politicians, including Western Australian Premier Colin Barnett and Prime Minister Malcolm Turnbull, the company backed down.

Walsh told the Rio’s annual general meeting in Brisbane this morning that the fact that the company reversed the decision so quickly was a testament to its strong values.

“It was based on information that turned out to be incorrect,” Walsh said.

“We took the courageous step of reversing it.”

Du Plessis said the way the company tried to implement the change was “not well done”.

“Sometimes in life one misjudges, and this was a misjudgement,” he said.

However, it emerged today that the company was still asking – but not forcing – some larger suppliers to move to 60 or 90-day payment terms.

A Rio spokesman confirmed the move.

“Under new contract negotiations, we will ask our larger and multinational suppliers to consider 60 or 90-day terms, but this will not be imposed on any business,” he said.

Rio’s Australian AGM ran for around two-and-a-half hours, with the board fielding questions mainly relating to the Mt Thorley Warkworth coal mine extension and labour relations.

Du Plessis also paid tribute to Walsh, who will be replaced by Jean-Sebastien Jacques on July 2.

“Sam took on the role of chief executive under difficult circumstances,” du Plessis said.

“However, as a result of his leadership, our company is now stronger, safer and more confident.

“Sam, on behalf of the board as well as our shareholders, I want to thank you for your unwavering focus and commitment during your time with Rio Tinto, but in particular for what you have done as chief executive.

“Together with your executive team and great people right across the organisation, you have succeeded in removing significant costs, strengthening the balance sheet and delivering on our promises to shareholders.”

Rio shares were up 0.7% to $A48.19.