Rio Tinto-China Spy Plot Thickens

BEIJING (TheStreet) -- The Chinese government has indicted four employees of the Australian mining giant Rio Tinto(RTP) under charges of bribery and industrial espionage.

The four Rio executives were originally arrested last July at the height of tense negotiations between the Chinese steel industry, by far the world's largest, and the three big mining concerns who source most of that industry's iron ore needs.

Each year, China and those three miners -- Rio Tinto, BHP Billiton(BHP) and Vale(VALE) -- negotiate a contract and a price under which ore is sold to China's mills and foundries for the following 12 months. Typically, a deal is usually struck each April, though last year's agreement were delayed by heated bickering.

Indeed, talks between the various parties have evolved -- or devolved -- into a kind of miniature regional commercial Cold War. In last year's episode, amid the worst part of the bear market and recession, China pressured the miners for deep price cuts -- much deeper than those accepted by steelmakers in Japan and Korea.

Now, with contract negotiations again heating up, China has at last gone public with the indictments, although no trial date has yet been set. The government has accused the four men of spying on its steel industry for six years, paying bribes to various mill executives in China in exchange for insider information that Rio would then (allegedly) use to keep iron ore prices artificially high.

One of the accused, an Australian citizen named Stern Hu, was Rio's chief iron-ore negotiator. The other three employees were on his staff.