Wednesday July 8, 09:01 AM
Australian Rio Tinto executive held in China
By Neil Sands
MELBOURNE (AFP) - Australia has sought urgent access to a Rio Tinto (LSE: RIO.L - news) executive detained with three colleagues in Shanghai as the mining giant pursues vexed iron ore talks with China.
Officials said they had not been told why the executive, named by local media as Stern Hu, was being held and called on China to explain.
"The government of course is making every effort at the moment to (find out why) through the appropriate mechanisms, through the embassy in China and the consulate in Shanghai," government minister Greg Combet told reporters.
Rio spearheaded tough Australian negotiations with China over this year's benchmark price for iron ore contracts, which missed a key deadline last week.
The debt-laden company also angered China in June when it snubbed a 19.5 billion US dollar cash injection from the state-owned Chinalco, opting instead for a huge rights issue and joint venture with BHP Billiton (LSE: BLT.L - news) .
Australian reports said Hu and the other employees, believed to be Chinese nationals, formed part of Rio's iron ore team and were detained on Sunday.
"We are seeking urgent consular access (and are) not yet able to comment on the reason for his detention," a foreign affairs spokeswoman said in a statement, without confirming the detained Australian's identity.
Australian media reported speculation that the detentions were linked to alleged manipulation of the iron ore market, while Chinese media have accused Rio of withholding product from the spot market to drive up prices.
China, the world's biggest iron ore consumer, has been seeking a deeper cut than the 33 percent negotiated with Japan and South Korea, while Rio says its customers are welcome to buy at spot prices.
However, the Anglo-Australian company said the reason for the detentions was "unclear."
"It appears four employees from Rio Tinto's Shanghai office have been detained for questioning by the Chinese authorities in Shanghai," Rio said in a statement.
"The reasons for these actions are unclear. Rio Tinto intends to co-operate fully with any investigation the Chinese authorities may wish to undertake and has sought clarification on what has occurred."
Meanwhile, Shanghai officials contacted by AFP were unable to confirm that the employees were being held.
"We are not on top of the situation at the moment. We will let you know if we have any information to release," a Public Security Bureau spokeswoman said.
One Australian politician, who had strongly criticised the Chinalco deal, said the incident showed the dangers of doing business with the Asian giant.
"This should be a sobering wake-up call for all Australians," said opposition senator Barnaby Joyce.
The suggested Chinalco deal had provoked intense debate in Australia, with many politicians and commentators voicing concern over China's march into the lucrative resources sector.
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