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Chinese Spy Probe Widens, Australia Wants Haste
Published: Tuesday, 14 Jul 2009 | 12:04 AM ET
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By: Reuters

Chinese investigators have questioned executives at several steel mills in a widening probe of alleged leaks of state secrets to Australian iron ore supplier Rio Tinto, Chinese media said on Tuesday.

AP
Factory, Anshan, China

The news comes as Australian officials urged China to move quickly in dealing with the detention of a senior Australian Rio executive on spying charges, a case that has cast a shadow over bilateral trade worth $53 billion in 2008.

"Our first concern is that their case has to be dealt with expeditiously and fairly," Australia's former China ambassador, Ross Garnaut, said on Tuesday.

"My experience is that difficult cases of this kind ... are best handled away from the megaphones."

Chinese media said the widening probe targets some of the nation's largest mills, all influential members of the China Iron and Steel Association (CISA) which represents the Chinese industry in annual negotiations with global iron ore miners.
     
Probe Widens

Investigations have reached the ranks of Baosteel Group, which used to lead negotiations, as well as Anshan Iron and Steel Group (Angang), its partner Benxi Iron and Steel Group, Shandong-based Laiwu Iron and Steel Group and Jinan Iron and Steel Group, the China Daily said.

Most of Benxi's iron ore team perished in an Air France crash following a trip to Brazil last month.

China detained Australian Stern Hu, a Rio Tinto [RTP  Loading...      ()   ] executive based in Shanghai, along with three of his Chinese colleagues, alleging the four "pried and stole" state secrets.

The charges relate to CISA's negotiating stance, as well as commercially sensitive information such as mill production plans, iron ore stock levels and import information, to aid Rio in annual price negotiations.

CISA took over as the lead negotiator in this year's round of talks after strong prices in the first half of 2008 forced Baosteel to agree to a sharp rise in term prices.

However, CISA failed to reach an agreement by the June 30 deadline as it attempted to get a better deal than the 33 percent cut agreed to by Japanese and South Korean rivals.

The 21st Century Business Herald said on Tuesday that senior Baosteel officials, including those involved in negotiating previous rounds of talks, had returned to work after being questioned.

All the mills have denied involvement or refused to comment.

A senior official at Shougang Group, China's eighth-largest mill, was detained last week for allegedly leaking information.

Copyright 2009 Reuters. Click for restrictions.
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