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Thursday, July 09, 2009

Rio Tinto staff held in China

By Ed Crooks in London and Patti Waldmeir in Shanghai

Published: July 8 2009 03:00 | Last updated: July 8 2009 03:00

Four employees of Rio Tinto, the Anglo-Australian mining group, have been detained in China without explanation, raising tensions as the company is locked in tough negotiations over iron ore prices .

Along with other international mining groups, Rio is in the middle of talks over iron ore contracts for 2009-10, which have still not yet been resolved even though many contracts expired last week. The miner has been criticised in China following its withdrawal from a planned $19.5bn (€14bn) investment by Chinalco, the state-owned aluminium company.

The Sydney Morning Herald reported that an Australian passport holder, Stern Hu, was among those detained and that Canberra was demanding consular access.

The other three employees were reported to be Chinese passport holders.

It is highly unusual for staff of a large foreign company to be detained in China. The four workers, reported to be members of Rio's iron ore sales team, were detained for questioning on Sunday. The company said in a statement that it was "concerned about the employees' wellbeing and is doing everything possible to help them and support their families".

Rio said it "intends to cooperate fully with any investigation the Chinese authorities may wish to undertake and has sought clarification on what has occurred".

Rio gave no details of the employees' nationality, or of their positions at the company. The four worked in Rio's Shanghai office, one of the company's main centres in China and its chief base in the country for iron ore sales and marketing.

While Japanese, Korean and Taiwanese steel companies have agreed contract prices with iron ore suppliers, the Chinese have yet to do so, demanding larger price cuts. Tension has been building for months between the China Iron and Steel Association, the country's lead negotiator, and Rio, at the negotiating table and in the Chinese press.

Some Chinese media have accused Rio of withholding iron ore from the spot market to drive up prices and undermine China's bargaining position in the price talks.

Shan Shanghua, secretary general of CISA and the organisation's lead negotiator in the talks, could not be reached by mobile phone yesterday for comment.

Additional reporting by Richard McGregor in Beijing and Daniel Dombey in Washington