Business as usual on China iron ore

July 16, 2009

, MELBOURNE, July 16 – Mining giants Rio Tinto and BHP Billiton denied on Thursday a report that iron ore shipments to China had been disrupted by the arrest of a Rio executive held on spy claims.

The Financial Times story suggested the firms had suspended spot iron ore exports following the July 5 arrest of Australian Stern Hu and three Chinese colleagues in Shanghai.

It said "almost nothing" was being shipped from Australia for the Chinese spot market in the wake of the arrests of the executives, who were involved in tough contract negotiations with Beijing.

But Rio Tinto spokesman Gervase Green said shipments were "proceeding as usual to all our markets", while a BHP spokeswoman said operations were continuing normally "both to and within China".

China has not detailed the allegations against Hu but says it can prove he was involved in bribery during the iron ore talks, equating the offences with spying and stealing state secrets.

Rio has expressed "surprise and concern" at the allegations and Hu\’s detention has sparked a diplomatic row between Australia and key trading partner China.

Australian Prime Minister Kevin Rudd Wednesday warned Beijing it had economic interests at stake and the world would be closely watching the case, which analysts say has sent a shiver through the business community.

And US Commerce Secretary Gary Locke said Wednesday he would raise the issue during an official visit to China this week.

"This is of course a great concern with respect to US investors, multinational companies from around the world that have projects here, that are involved in energy," Locke told CNN.

Hu was lead negotiator for Rio, the world\’s third-largest miner, in the talks with China to set iron ore prices for the coming year.

The negotiations had become deadlocked on Beijing\’s demands for deeper cuts from last year\’s benchmark than the 33-44 percent negotiated with Japan and South Korea.

China, the world\’s biggest consumer of iron, said this week that the negotiations were continuing despite Hu\’s arrest.

Chinese state media allege Rio bribed executives from all 16 of China\’s major steel mills to obtain sensitive industry data.


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