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Is China Punishing Rio Tinto For Deal With BHP?

China’s growing appetite for steel and iron ore may be generating some intense scrutiny. Four employees of Rio Tinto have been detained in Shanghai.

It’s unclear whether they are suspects in some kind of crime or if the arrests are political.

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

According to reports from CNBC Asia, the detentions are part of a broader investigation into allegations of kick-backs paid to state owned steel mills.

However, there’s some speculation the move by Beijing is more an act of retaliation than anything else.

On June 5, Rio announced it had dumped plans for a landmark deal with China’s Chinalco and instead decided to seal an iron ore joint venture with Australia based BHP Billiton.

Considering these unsettling events, how should you trade the space?

I don’t think there’s any big espionage here, speculates Tim Seymour. But I do think it shows the value in all the ore companies. Considering for the month Rio Tinto is down 34%, Vale is down 17% and BHP is down 15%. I’d put them all on your radar.

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Trader disclosure: On July 8th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AA), (AAPL), (BAC), (BX), (EEM), (FXI), (F), (INFY), (SBUX); Seymour's Firm Owns (FCX); Terranova Owns (MSFT), (XBI), (ABT), (OIH), (RIMM), (SUN) ; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Finerman Owns (RIG), (TBT); Finerman's Firm Owns (FCN), (MSFT), (NOK), (PBR), (RIG), (TBT), (WMT), (FLS); Finerman's Firm Owns (BAC) Preferred; Finerman Owns (BAC) Preferred; Finerman's Firm Is Short (BAC), (IYR), (IJR), (MDY), (SPY), (USO) with wires