Mining giants accused of delaying payments
MAJOR mining companies in Queensland have been accused of crippling the supply chain and reducing employment by refusing to pay their bills on time.
The issue has led to calls for the Federal Government legislate to force them into 30-day payment terms.
A report by the Resource Industry Network (RIN), the peak industry association representing supply chain companies actively engaged in the resource sector, reveals significant tension between its members and the major mining houses over the issue and a lack of progress in getting the industry in line.
The report was submitted to a Federal Government standing committee on industry, innovation science and resources which was hearing evidence in Rockhampton yesterday and in Mackay today.
It details how the mining companies extended the payment terms during the downturn and despite a boom-like revival now the majors were still not paying on time.
An economic report commissioned by RIN said up to 380 extra jobs and $150 million in wages would be generated if the major mining companies in the Bowen Basin paid their bills on time.
"Difficulties in raising finance to cover these extended payment terms have led a number of firms to cut back on planned employment, reduce investment in more productive plant and equipment and defer investment in research and development,'' the economic analysis said.
"While Resource Industry Network is not in favour of increasing the amount of regulation imposed on the industry, the work it has done over the past 18 months has failed to deliver a satisfactory result in the matter of extended payment terms,'' the report said.
"There is undoubtedly a substantial likelihood of an imbalance in bargaining power between the large resources companies and many of the businesses in the supply chain.''
It also found that only a small number of supply chain companies could pass on the extended trading terms to their own suppliers and almost half had to source alternative bridging finance.
Queensland Resources Council chief executive Ian Macfarlane said small businesses in regions like Mackay were essential to the longevity of the resources sector.
"Our resource companies recognise this and are working to ensure local businesses have the best chance to benefit from the investment resources projects bring to regional areas.
"Our members have in place payment term systems to speed up the time it takes to pay invoices to suppliers.
"The decision was made for it to be a commercial issue for each company to address and was best dealt with through company specific plans."