China detains Rio Tinto executive

A Rio Tinto executive was held captive by Chinese authorities in Shanghai on suspicion of espionage and accused of stealing state secrets. Stern Hu, General Manager for Rio Tinto's iron ore operations in China, may face formal charges. Rio Tinto said that four Shanghai-based employees have been taken into custody by Chinese authorities, although the company does not know why they are being held. The company has not had any contact with the employees since they were detained. The Anglo-Australian miner's Shanghai office handles sales and marketing to its major Chinese customers, who is the biggest buyers of Rio Tinto's iron ore globally. The incident comes in the backdrop of sensitive annual iron-ore price talks between the leading miners and Chinese steelmakers. China fell out with Rio Tinto after the latter rejected a big investment by China’s state-backed aluminium firm. China is also trying to whittle down iron-ore prices in talks with Rio Tinto and other major miners.

Reports suggested that a Chinese steel executive detained along with four Rio Tinto employees is being investigated for leaking China's bottomline on iron ore prices. Tan Yixin, the head of iron ore imports for state-owned steelmaker Shougang, is suspected of revealing China's negotiating strategy to the Anglo-Australian miner. This week's shock detentions left the price talks on annual iron ore contracts in shambles and cast a shadow on relations between China and Australia.