Rio Exec Held in China on Spy Suspicions: Australia

Rio Tinto employee Stern Hu has been detained by Chinese state authorities on suspicion of espionage and stealing state secrets, Australian Foreign Minister Stephen Smith said on Wednesday.

Smith said there was no evidence for drawing any link between the detention of Hu, Rio Tinto's iron ore marketing chief in China, and any commercial matters concerning Rio, including its aborted $19.5 billion tie-up with China's state-owned Chinalco.

Hu, an Australian citizen, was one of four employees detained in China on Sunday.

Aussie Govt Presses China on Rio Detentions

The Australian government faced mounting pressure on Wednesday to intervene with its largest trading partner, China, over the mysterious detention of four staff of Anglo-Australian miner Rio Tinto.

One daily, The Age, called on Prime Minister Kevin Rudd to take action in the affair, which has been portrayed against the background of tense negotiations over iron ore exports to China and the recent failure of a huge Chinese investment in Rio Tinto.

"While the reasons for the arrests are still unclear, the detentions are taking place against the backdrop of tense and drawn-out negotiations over iron ore prices," The Age said in an editorial on Wednesday.

"The Rudd government needs to take clear and decisive action while avoiding a potential diplomatic stand-off with Australia's largest trading partner. In short, ensuring the safety of the four detained employees needs to be the government's main priority," it added.

Rio Tinto declined to add to its original statement that the four employees appeared to have been detained in Shanghai by Chinese authorities, and that the reason was unclear.

"We haven't been able to make contact with them since and we've asked the Chinese authorities for an explanation and we haven't received anything from them," a Rio spokesman said.

Three of the four being detained by the Public Security Bureau are Chinese citizens, the Sydney Morning Herald newspaper said, adding that the fourth was an Australian passport holder.

The Age named the Australian as Stern Hu who had been detained "along with the rest of the iron ore sales team".

Australia's Department of Foreign Affairs and Trade said the Australian man was detained on Sunday, but diplomatic officials were still unclear about the reasons for his arrest.

"The consulate-general in Shanghai are seeking to establish with the Chinese authorities the reasons for these detentions and are also seeking urgent consular access to the man involved," a department spokeswoman said.

Rio said the Shanghai office was mainly a sales and marketing office for the company, the world's second biggest iron ore producer, which is listed in London and Sydney.

"Obviously China is a very big market for us particularly in terms of iron ore, so we have quite a significant presence in China."

He declined to give the employees' names.

"Rio Tinto intends to co-operate fully with any investigation the Chinese authorities may wish to undertake and has sought clarification on what has occurred," Rio Tinto said in a statement.

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On June 5, Rio announced it had dumped plans for a $19.5 billion investment from Chinalco and instead sealed an iron ore joint venture with rival BHP Billiton.

Several days later, China's official Xinhua news agency slammed Rio's "perfidy" for scrapping the deal.

Rio has been locked in difficult talks with China's huge steel sector, the biggest customer for Rio's iron ore. Rio has refused to give in to Chinese demands for a bigger cut in contract prices and has been shipping material on the spot market.

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