Mon, Jul 20, 2009 - Page 11 News List

Rio executive may be charged

CRIMINAL PROBE The Australian foreign minister says Beijing arrested Rio Tinto’s Stern Hu because of an investigation into iron-ore pricing talks

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A worker takes a nap while lying on a pile of steel wires at a stockyard in Shanghai, China, on Friday.

PHOTO: EPA

China’s arrest of Rio Tinto Group’s Stern Hu (胡士泰) is related to a criminal probe into iron-ore price talks, not espionage, and the case may result in a decision to charge the mining executive, Australia’s foreign minister said.

Stephen Smith, who met with Chinese Vice Foreign Minister He Yafei (何亞飛) on Friday, again urged China to provide more information about the arrest of the Australian citizen, the minister told the Australian Broadcasting Corp (ABC) yesterday.

“If they do charge him, the precise details will be there for all to see,” Smith said.

The investigation into Hu and three other Rio executives detained on July 5 has strained relations between China and Australian Prime Minister Kevin Rudd, a Mandarin-speaking former diplomat to Beijing. China said on Thursday that Australia was an “interference” with the nation’s legal sovereignty.

“It’s getting more and more mired in what looks like politics and high-level Chinese bureaucracy,” said Peter Arden, a resource analyst at Ord Minnett Ltd in Melbourne. “It’s going to have some impact, in the short-term at least, on iron-ore supply and commerce more generally.”

Chinese Foreign Ministry spokesman Qin Gang (秦剛) had said on July 9 that Hu was suspected of “stealing Chinese state secrets for foreign countries.”

China has also accused Hu of bribing steel mill officials during the iron-ore negotiations, Smith said last Friday, citing a statement from Shanghai’s Security Bureau.

Rio’s Denial

Rio, the world’s third-biggest miner, has denied the allegations against Hu, who manages the London-based company’s iron-ore business in China, and the three other employees, who are Chinese nationals. Rio Tinto spokeswoman Amanda Buckley yesterday declined to comment when contacted by phone.

China is the world’s biggest steelmaker and relies on iron-ore shipments from Rio, BHP Billiton Ltd and Brazil’s Vale SA to feed the industry. The round of iron-ore talks is meant to set contract prices for the raw material from April 1.

“It’s quite clear they are focusing on a criminal or judicial investigation relating to the 2009 iron-ore negotiations,” Smith told the ABC’s Insiders program yesterday. “They are not interested in what we would regard as espionage or national security matters.”

Rio Tinto denied allegations this week that the four executives had bribed officials at Chinese mills.

Employees “acted at all times with integrity and in accordance with Rio Tinto’s strict and publicly stated code of ethical behavior,” iron-ore unit chief Sam Walsh said in a statement on Friday.

The case is making many Australian businesses “wary of getting entrapped in something unwittingly,” Ord Minnett’s Arden said by phone.

‘No Magic Solution’

Julie Bishop, the Australian opposition’s foreign affairs spokeswoman, yesterday called on Rudd to raise the issue of Hu’s detention with senior Chinese officials.

While Australia will continue to push China to resolve the case quickly, “there is no magic solution,” Smith said. “We have to expect that we may well be in for a long-haul here.”

Smith said he also told He that he would have preferred to get more information from Chinese officials much earlier.

“I was frankly disappointed that I didn’t get those through the usual channels,” Smith told the ABC.

Rio, which has about a third of its assets in Australia, last month scrapped a US$19.5 billion investment by Aluminum Corp of China (中鋁). China is Australia’s second-biggest trading partner, with two-way trade worth A$68 billion (US$55 billion) last year, and the biggest source of foreign investment.

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