Rio spy case may hamper iron ore talks

(chinadaily.com.cn)
Updated: 2009-07-10 12:56

The detention of the employees of Australian mining giant Rio Tinto may have influence on China's negotiations on iron ore pricing with the firm, local media reported early Friday.

Four employees of the world's second largest iron ore miner were detained on charges of espionage on July 5 in Shanghai. All of them, including general manager Stern Hu, are staff members of the company's Shanghai office.

Rio is still in talks with Chinese steel mills over iron ore contract prices although the negotiations have passed the June 30 deadline.

"Hu's detention will surely impact the talks," an insider told a local newspaper in Shanghai. "Hu is the company's chief representative in China, so his detention may result in a 'short suspension' of the talks."

Currently, China Iron and Steel Association (CISA) is leading the talks with Rio. Rio stuck to its offer of a 33-percent price cut for 2009-2010 contracts, while the CISA insisted on a 40-percent cut.

Earlier media reports said CISA had already signed up to the 33 percent price cut agreed by Japan and South Korean rivals, but only for a six-month period rather than a full year. CISA later denied the reports.

Tian Zhiping, deputy general manager of Hebei Iron & Steel Group Co. Ltd, confirmed that talks with Rio have not finished and no agreements have been reached yet. Tian is also a member of CISA's negotiation team.

Rio claimed Thursday that Stern Hu's department is in charge of its negotiation with CISA though Hu himself is not member of the negotiating team.

Amanda Buckley, an executive responsible for Rio’s publicity, told the newspaper negotiations are still underway and Rio has no plan as yet to replace Hu.