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FM confirms detentions in spy scandal

CHINA confirmed yesterday that four Shanghai-based employees of Anglo-Australian miner Rio Tinto have been detained on charges of stealing state secrets.

A broader probe into China's steel sector also came to light with the reported detention of a steel company official and news that other industry executives were under investigation.

Foreign Ministry spokesman Qin Gang said the action against Stern Hu, head of Rio's China iron ore operations, and his three colleagues, are based on substantial evidence.

Chinese-born Hu is an Australian passport holder. The other detained Rio employees are all Chinese nationals, identified by domestic media as Liu Caikui, Wang Yong and Ge Minqiang.

In Australia, Foreign Affairs Minister Stephen Smith said yesterday that the Chinese government would grant a consular visit to Hu today.

Qin told a press conference in Beijing that the theft of secrets had hurt China's economic security and interests.

He cautioned, however, that the case shouldn't be politicized and used to harm cooperation between China and Australia.

The Shanghai State Security Bureau, which detained the Rio staff on Sunday, alleged that the mining giant's employees bribed Chinese steel company officials to obtain secret commercial information.

The 21st Century Business Herald reported yesterday that Tan Yixin, head of iron ore operations at the foreign trade and investment unit of Chinese steel group Shougang, was detained by Beijing police on Tuesday.

Shougang declined to confirm the report yesterday.

Industry sources said some officials at other mills in Hebei and Shandong provinces are also under investigation for business crimes.

Rio's Shanghai office mainly houses its sales and marketing team. Hu is understood to be directly involved in the annual iron ore price negations with domestic mills.

"We have been advised by the Australian government of this surprising allegation," Rio Tinto said in a statement yesterday. "We are not aware of any evidence that would support such an investigation."

The incident comes as the price talks have been deadlocked for months. The China Iron and Steel Association, which leads the Chinese side, rejected the prices accepted by Japanese and South Korean mills.

The CISA has been intensifying a crackdown on unauthorized trading. In some cases, small mills have signed term deals with foreign miners without permission. The CISA worries such actions could undermine the group's pricing power and harm national interests.


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