Sep 21, 2017

Push to rein in mining company payment terms

Push to rein in mining company payment terms

Seven regional Queensland industry groups and economic development bodies have joined forces in a call for major mining houses review their payment terms for suppliers.

In letters sent to the heads of major mining houses operating in regional Queensland, the group outlined the significant negative impact that 60-day payment terms have on the local supply chain.

Resource Industry Network general manager Adrienne Rourke said it was time to revert to more acceptable payment terms of 30 days given the positive financial results being reported by mining houses. This would enable a sustainable business environment.

Resource Industry Network, Gladstone Engineering Alliance, Central Highlands Development Corporation, Toowoomba and Surat Basin Enterprise, Greater Whitsunday Alliance, Townsville Enterprise Limited and Capricorn Enterprise have been working together on this matter for a number of months.

They recently surveyed regional business on the matter and found more than 70 per cent of respondents were having trouble growing their business and delivering goods and services on account of the extended payment terms.

Almost half of respondents had been forced to source alternate bridging finance to mitigate the impact of the extended trading terms and almost three quarters of respondents nominated that the extended trading terms had had a material impact on their organisation’s ability to deliver goods and services in some way.

Many had been unable to pass on the extended trading terms and continued to pay their staff in seven days and their creditors in 30 days, the survey found.

“The regional supply chain has always worked diligently to provide the innovative solutions to assist mining houses achieve successful cost-effective, productive outcomes with quality equipment and professional contractors,” Mrs Rourke said.

“It is widely acknowledged that without these businesses the mining sector would be significantly impacted.

“Ultimately if the extended 60-day payment terms persist there will be fewer suppliers in the market, meaning higher prices, less competition, reduced capacity and the burden of R&D will fall entirely back to the mining houses.

“At a time when our industry is under intense scrutiny from banks, the community and anti-coal activists, it’s important that the industry stand shoulder to shoulder to present a united sector and highlight the benefits of the resources sector and its contribution to the economy, and society at large and encourage the next generation of employees to work in the sector.”

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