China Claims Rio Tinto Stole State Secrets

Beijing said it has proof four employees of miner Rio Tinto stole state secrets for foreign countries; workers were detained amid contentious iron ore price talks.

BEIJING (AP) -- China agreed to let Australia's diplomats meet Friday with a detained Australian employee of miner Rio Tinto Ltd. after the government said it had proof he and three co-workers stole state secrets.

China's foreign ministry confirmed Thursday that four employees of Rio's Shanghai office have been detained. The other three are Chinese.

"Competent authorities have sufficient evidence to prove they have stolen state secrets and have caused huge losses to China's economic interests and security," foreign ministry spokesman Qin Gang told reporters.

The detentions came as Rio, the world's third-largest mining company, was acting as lead negotiator for global iron ore suppliers in price talks with Chinese steel producers. There is no indication whether the case is linked to those negotiations.

Diplomats will be allowed to see Stern Hu, who is in charge of Rio's Chinese iron ore business, under a consular agreement, Australian Foreign Minister Stephen Smith announced late Thursday. That came after the government summoned China's acting ambassador to Australia to press for access to Hu.

The official Xinhua News Agency, citing security officials, said the four employees were arrested, which can mean an almost automatic conviction. But Qin said they were detained, a step before a formal arrest.

Rio and the Australian government said they have received no explanation of the charges against Hu and his co-workers. Rio said in a statement Thursday it knew of no evidence to support spying accusations.

Qin warned Australia not to politicize the case: "It's improper to exaggerate this individual case or even politicize it, which will be no good to Australia."

He rejected speculation in Australia that the case was retaliation for Rio's decision last month to cancel a multibillion-dollar investment deal with a Chinese state-owned company.

China's vague security laws give authorities wide latitude in deciding what to prosecute. The government treats a sweeping array of economic and other data as state secrets. The maximum penalty for an espionage conviction is life in prison.

Meanwhile, a Chinese steel executive who had "close contact" with Hu was detained Tuesday by Beijing police, the newspaper 21st Century Business Herald reported.

Tan Yixin, general manager of Shougang International Trade & Engineering Corp., oversaw iron ore purchases, the Herald reported, citing unidentified sources. It gave no indication whether the two cases were linked. Qin, the foreign ministry spokesman, would not say whether Tan was connected to the Rio case.

Prime Minister Kevin Rudd, a Mandarin-speaking former diplomat, said he had no plans to call Chinese President Hu Jintao to discuss the case, the Australian Associated Press news agency reported.

"The advice from our consular officials is to work step by step, and we will raise it at whatever level of the Chinese leadership is necessary at the relevant time," Rudd said during an official visit to Rome.

Iron ore price talks failed to produce an agreement by the June 30 expiration of previous buying contracts after China's steel industry association rejected prices negotiated by Rio with Japanese and Korean mills. The other major suppliers are Australia's BHP Billiton Ltd. and Brazil's Vale SA.

China criticized Rio and the Australian government last month after the company abandoned a deal to have Aluminum Corp. of China, or Chinalco, invest $19.5 billion in Rio Tinto.

Rio, which is headquartered in London and has executive offices in Melbourne, launched a rights issue to raise money instead. Chinalco took up a portion of the $15.2 billion share issue to maintain its 9 percent stake in the company.

The Chinese steel industry group also criticized Rio's plan to form a joint venture with Billiton, combining their mining assets in western Australia. The group said the tie-up might reduce competition, raise prices and hurt customers.

Joe McDonald reported from Beijing and Rohan Sullivan from Sydney. Associated Press writer Audra Ang and researcher Bonnie Cao in Beijing contributed to this report.

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