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.

Rio Tinto to cut iron ore output by 10%

Rio Tinto, the world's second-largest iron ore exporter, said on Nov 10 that it was planning to cut production by 10% from its giant Pilbara mine in western Australia to bring output in line with weakening demand. The Anglo-Australian mining giant said it was revising estimates of iron ore shipments from the Pilbara region to between 170mn tons and 175mn tons in 2008. The company produced 145mn tons of ore from its Pilbara mines last year. It had forecast 2008 output of between 190mn and 195mn tons in October. Rio produced 139.2mn tons in the first nine months of the year. "Operations continue to perform well, but demand has continued to decelerate. This reduction is a prudent move to align production with revised customer delivery requirements in the light of the fourth quarter drop in Chinese demand," said Rio's CEO Tom Albanese.