BHP has announced a change to its procurement policies, extending preferred payment terms of 30 days to all Australian businesses in areas deemed local from December 1.
Coal business BHP Billiton Mitsubishi Alliance (BMA) has agreed to implement the new terms, and asset president James Palmer said the decision was made following a period of engagement with suppliers, host communities, the Resource Industry Network and the Federal Government.
“We’ve heard concerns about the impact of our standard global payment terms on local businesses, and recognise there is more we can do to support our local communities,” he said.
“We will extend our preferential terms further than the existing small and local businesses already captured.”
All of BHP’s suppliers whose primary operating presence is in a local area like Mackay – regardless of size – will be placed on 30-day payment terms as the new local standard.
The terms will extend for the first time to businesses in the Rockhampton region, which has been re-zoned as ‘local’ as part of BHP’s review of its procurement practices.
A workshop will be held in Mackay for local suppliers in December, where BHP will assist businesses to work with its procurement system.
Resource Industry Network (RIN) general manager Adrienne Rourke said the announcement was good news for regionally-based businesses in the resources supply chain and would help in reducing the use of debt to fund operating costs, making businesses more resilient and responsive to market changes.
The announcement meant a further 256 Mackay businesses would now be on 30-day payment terms with BMA, a sizeable increase from the current 89 existing local vendors.
“By making this change to its procurement policies, BHP has demonstrated that it values the communities in which they have a footprint and wants those local suppliers to grow stronger businesses,” Ms Rourke said.
“Resource Industry Network would like to acknowledge BHP for listening and responding to its supply chain.
“Businesses will be better able to fund intangible inputs such as research and development, and training. These drive the innovation that our sector is famous for.”
The news comes hot on the heels of a similar announcement from Peabody.