Fri, Jul 10, 2009 - Page 1 News List

China claims it has evidence Rio Tinto staff were spying

AGENCIES , BEIJING, SYDNEY AND MELBOURNE, AUSTRALIA

China said yesterday it had evidence proving employees of mining giant Rio Tinto, including an Australian, stole state secrets.

“Competent authorities have sufficient evidence to prove that they have stolen state secrets and have caused huge loss to China’s economic interest and security,” foreign ministry spokesman Qin Gang (秦剛) told reporters.

Australian Stern Hu (胡士泰), chief representative of Rio Tinto in Shanghai, was detained on Sunday along with colleagues who are suspected of espionage and stealing state secrets for foreign countries, Qin said yesterday.

Authorities in Shanghai earlier said Hu was being held along with three Chinese nationals who are Rio Tinto sales employees.

Rio is the world’s second- largest iron ore producer and its Shanghai office, where the men worked, focuses on sales and marketing to China.

PROPOSAL

Tensions between China and the miner rose after Rio dumped a proposal from its largest shareholder, state-owned Chinalco (中國鋁業), to inject US$19.5 billion into the firm in favor of a rights issue and joint venture with BHP Billiton.

Asked whether the detention of the four employees was linked to Chinalco’s failed deal, Qin said it would be “improper” to exaggerate the case.

Qin refused to comment on the nature of the state secrets.

Australian Foreign Minister Stephen Smith said his officials had yet to talk to Hu after his weekend detention and were keen to ensure he had not been mistreated.

“One of the reasons why we want access to him, is to satisfy ourselves as to his welfare, to satisfy ourselves as to his well-being and to get some indication from him as to how we can be of assistance,” Smith told ABC television.

Smith described the spying accusations as “very surprising” and said the government was seeking urgent access to Hu and wanted to know more ahead of tomorrow’s deadline for consular access to Hu by Australian diplomats in China.

IRON ORE

China is Australia’s second-largest export customer behind Japan, buying A$36 billion (US$28 billion) of mostly commodities in the 11 months ended in May. Last year, more than half of China’s imports from Australia were of iron ore.

Rio Tinto has spearheaded difficult talks with China over new iron ore contracts, which missed a key deadline at the end of last month.

Australian media has reported speculation that the detentions were linked to alleged manipulation of the iron ore market, while the Chinese press has accused Rio of withholding products to drive up prices.

The Securities Times quoted unnamed “industry insiders” as speculating the detentions may have been over suspected bribery.

Meanwhile, a Chinese steel executive who had “close contact” with Hu has been detained by Beijing police, the newspaper 21st Century Business Herald reported yesterday.

Tan Yixin (譚以新), general manager of Shougang International Trade Engineering Corp (首鋼國際貿易工程公司), oversaw iron ore purchases, the Herald reported. It gave no indication that the two cases were linked.

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