Friday July 10, 08:03 AM
Rio Tinto arrests tied to iron ore talks: Australia
By Talek Harris
SYDNEY (AFP) - Australia said China's arrest of a top Rio Tinto (LSE: RIO.L - news) executive for alleged spying was linked to fraught iron ore negotiations, as Chinalco denied the move was payback for a collapsed deal.
Foreign Minister Stephen Smith said Stern Hu, accused of spying and stealing state secrets, appeared to be the subject of a criminal investigation into claims he bribed Chinese steel mill officials during the iron ore talks.
"As understood from Shanghai State Security Bureau, during China's iron ore negotiations with foreign miners in 2009, Stern Hu gathered and stole state secrets from China via illegal means including bribing internal staff of Chinese steel companies," said Smith, referring to a statement on an official Chinese website.
"This has caused huge loss to China's national economic security and interests."
Rio, the world's third-largest miner, has been locked in difficult talks with China to set iron ore prices for the coming year, with a key deadline missed on June 30.
On Friday, it issued a statement saying that it was "surprised and concerned" by the claims of bribery.
Chinese media have reported that the head of iron ore trading at Shougang Group steel company, who had "close contact" with Hu, has also been arrested for suspected commercial crimes.
Hu's arrest, along with three Chinese colleagues, also follows Rio's snubbing of a 19.5-billion-US-dollar cash injection from state-owned Chinalco, its biggest shareholder.
But Chinalco Friday moved to quash rumours that the arrests were linked to the deal's failure. A spokesperson said in a statement that "the situation is in no way related to any commercial dealings between Rio and Chinalco."
Meanwhile, Australian officials were due to see Hu for the first time on Friday, after being assured about his wellbeing by Chinese officials.
"China has its own laws about state secrets. They are clearly broader than any that Australia may have," Smith said.
"Frankly, it's difficult for a country like Australia to see a link between espionage or national secrets and commercial negotiations."
Earlier, Mandarin-speaking Prime Minister Kevin Rudd rejected calls to intervene in the highly sensitive case and stressed the need for caution.
"With all complex consular cases, we have to proceed cautiously on the basis of the advice as it unfolds," the former diplomat told public broadcaster ABC.
"What we've already done in Beijing and Shanghai and Canberra is make strong representations for access to this Australian citizen."
The incident has already caused diplomatic ructions with Canberra summoning the acting Chinese ambassador Thursday for an explanation.
China is the world's biggest consumer of iron ore and Australia's second-most important trade partner with the relationship worth 58 billion US dollars last year, according to official figures.
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