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Rio Tinto Staff Face Spy Charges in China

The Associated Press

BEIJING -- Four employees of Anglo-Australian mining giant Rio Tinto (RTP) have been arrested on charges of stealing state secrets, a government news agency reported Thursday.

The Xinhua News Agency report, China's first public confirmation of the case, gave no details of the charges against the employees of Rio's Shanghai office. Australia's government says one of the detainees is Australian and it is pressing for access to him.

The weekend detentions came amid contentious iron ore price talks between Rio and Chinese steel mills. But there has been no indication whether the case is linked to the negotiations.

China's vague spying and national security laws give authorities wide latitude in deciding what to prosecute. The government treats a sweeping array of economic and other data as state secrets.

The maximum penalty for a conviction on espionage charges under Chinese law is life in prison. A formal arrest in China means an almost automatic conviction.

The Rio employees are accused of "alleged stealing of China's state secrets," Xinhua said, citing state security officials in Shanghai.

The detained Australian, Stern Hu, is the Shanghai-based general manager of Rio's Chinese iron ore business, according to the Australian government. It says the three other detainees are Chinese nationals.

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

Tan Yixin, general manager of Shougang International Trade & Engineering Corp., oversaw iron ore purchases, the Herald reported, citing unidentified sources. It gave no indication whether the two cases were linked.

A spokesman for Shougang Group, parent company of Tan's employer, said he could not confirm whether Tan was detained. He would give only his surname, Wu. The foreign ministry and Beijing police did not immediately respond to questions by phone and fax.

Australian diplomats are pressing for access to Hu and details of his case, according to Australian Foreign Minister Stephen Smith. Under a consular agreement, China has a week to respond and Smith said diplomats expect to see him Friday or Saturday.

"We are perplexed by the reason for his detention," Smith told Australian Broadcasting Corp. television. "We're asking for additional information as to the basis of his detention."

Rio, which is headquartered in London but also has executive offices in Melbourne, said it knew of no evidence of spying.

"We have been advised by the Australian government of this surprising allegation. We are not aware of any evidence that would support such an investigation," the company said in a statement. It declined to comment further.

Rio Tinto, the world's third-largest mining company, is lead negotiator for global iron ore suppliers in price talks with China, the world's biggest steel producer.

The two sides failed to reach agreement by the June 30 expiration of previous buying contracts after China's steel industry association rejected prices negotiated by Rio with Japanese and Korean mills. The other major suppliers are Australia's BHP Billiton (BHP) and Brazil's Vale.

China criticized Rio and the Australian government last month after the company abandoned a deal to have state-controlled Aluminum Corp. of China(ACH), or Chinalco, invest $19.5 billion in Rio Tinto.